CMA call for information on use of online reviews

Online reviews: love them or hate them, there is no escape. Products, services, large multinationals, SMEs, online or offline, almost everyone is being judged these days.

A good rating can be a boost and may have a positive effect on custom but a poor one can tarnish reputation and have damaging repercussions, namely, loss of repeat and new business.  But how genuine are such reviews?  This has been a growing concern for consumers and businesses alike.  What is to stop businesses from just posting up fake self-authored reviews or contrived endorsements?  How can you trust that what you read on review sites really is true and impartial? If you are a supplier/service provider, how will your clients know that online reviews about your business can be trusted? You may remember the publicity last year when one hotelier in the UK "fined" former guests £100 for posting a bad review about their stay.  This was apparently set out in the booking terms and conditions.  It is an extreme example of a business trying to stifle negative comments and enforce penalties against those who choose to publish anything other than glowing reviews. Also, it is now very common for search engine optimisation ("SEO") companies to post reviews. There was some controversy in recent years in the USA when several SEO companies there were fined for posting fake positive reviews to improve their clients' stats and counteract any negative (but real) reviews.

Following on from its call for information earlier this year on the commercial use of consumer data, the Competition and Markets Authority ("CMA") has published a further call for information in relation to online reviews and endorsements.  The CMA intends to look at the roles that media companies, online reputation managers and SEO companies play in such review postings. In its call for information, the CMA distinguishes between "hard" factual information, for example, price, to "softer" information such as quality and online endorsements.

The CMA is particularly interested in:

1. How consumers select and use review sites and blogs and extent to which they rely on them.  Does this make consumers vulnerable to being misled when they make buying decisions?
2. How suppliers and intermediaries promote their brands and manage their reputations online and whether they are carrying out practices that have the potential to mislead.
3. What action online review sites, blogs and other sites hosting this material take to ensure that consumers are not misled by their content and whether the way these sites display information on different goods and services may have the potential to distort consumers' decision making
4. Whether 1 - 3 are, on their own or together, leading to significant detriment to consumers and/or businesses.

There will be a focus on three main sectors: home repairs/maintenance, holidays and hotels and beauty products but the CMA has stressed that information connected to other sectors will be welcome.  Response forms are available for bloggers, brand promoters/reputation managers, consumers, review sites and suppliers. The CMA has said that the results should help it to determine if any further action is needed.  For example, consumer enforcement action, advocating legislative change or providing industry guidance.

We think that this call for information is a positive step because online reviews and endorsements are becoming much more of a dangerous area for businesses.  It is important to think about ways to show provenance and credibility of online reviews because for many businesses, this is a pivotal part of the marketing strategy.  This is especially so given the role of social media in review processes which allows reviews to be shared around online communities often with ease and often by just one click of a mouse. 

The CMA's call for information and response forms can be found here.  It will close at 5pm on Wednesday 25 March 2015.  The findings are expected to be published this Summer.