DMCC Bill in focus: part three

New regulations targeting fake reviews

* Note this article has been updated to reflect the further proposals for regulating fake reviews in the Department of Business and Trade Consultation of 4 September 2023.

In Part 3 in our series on the Digital Markets, Competition & Consumers (DMCC) Bill, we will be looking at the provisions of the Bill designed to protect online shoppers against fake reviews.

There has been a lot of noise around this particular issue. Government research published in April 2023 estimated that, for e-commerce platforms widely used by UK consumers, 11% to 15% of all reviews across 3 common product categories (consumer electronics, home and kitchen, sports and outdoors) are now fake.

But what does this mean for consumer-facing businesses that display consumer reviews on their websites? Here we look at the current legal position and how the DMCC Bill could change that.

What is the current UK legal position around fake reviews?

As things stand, there are currently no specific UK laws targeting fake product reviews. While knowingly buying or selling fake reviews is likely to breach existing consumer protection laws (which are flexible and principle-based) there has long been a belief that the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) should specifically cater for this kind of behaviour. In some countries there have been criminal prosecutions – most notably in Italy, where a man was jailed for 9 months in 2018 for selling fake Tripadvisor reviews.

Nevertheless, this is an issue that has been on the radar of UK regulators for some time. In 2016, the Competition and Markets Authority (CMA) took enforcement action against Woolovers after finding that the knitwear retailer had ‘cherry-picked’ more favourable customer reviews for publication on its website and removed negative feedback. Woolovers staff had instructed staff to approve only a selection of reviews, and none below 4 stars. This resulted in almost half of the reviews it received during the period going unpublished.

The CMA subsequently issued guidance on how to comply with consumer protection law on online reviews and endorsements.

In June 2019, the CMA launched a further programme of work aimed at tackling fake and misleading online reviews. To date, the CMA has secured commitments from Meta and eBay to implement measures to enable them to better detect fake reviews, for example using automated detection technology, and, in June 2021, the CMA launched a formal probe into whether Amazon and Google have broken consumer law by taking insufficient action to protect shoppers from fake reviews.

We have also seen regulatory enforcement in this space from the Advertising Standards Authority, which has previously ruled against companies offering a £3 refund to customers who left a “nice review” and for offering an additional entry into a prize draw for customers who posted a five-star review.

Why is additional legislation required?

As noted above, the publishing, procurement or sale of fake reviews currently does not fall within the “blacklist” of banned commercial practices under the CPRs. This means that in order to evidence a breach of the CPRs, the CMA or other regulators would generally need to show that a false review causes or is likely to cause the average consumer to take a different transactional decision. This isn’t always easy to prove.

The government hopes that creating specific legislation governing this space will create greater certainty for businesses and make it simpler for regulators to enforce the law.

How will the law change?

The DMCC Bill gives the Secretary of State the power to add to the current list of banned unfair commercial practices under Schedule 1 of the CPRs (which will feature at Schedule 18 of the DMCC Bill) [1] by way of secondary legislation.

In September 2023, the Department of Business and Trade (DBT) published a consultation which set out, amongst other things, its proposals for how the list of banned practices could be extended to cover false and misleading product reviews.

Click here to read the legislative proposal

As premised by the Government’s response to the Reforming Competition and Consumer Policy Consultation published in April 2022, the proposed new banned practices include:

submitting a fake review, or commissioning or incentivising any person to write and/or submit a fake review of products or traders;
offering or advertising to submit, commission or facilitate a fake review; and
misrepresenting reviews, or publishing or providing access to reviews of products and/or traders without:
- taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews; and/or
- taking reasonable and proportionate steps to prevent any other information presented on the platform that is determined or influenced by reviews from being false or in any way capable of misleading consumers.

The DBT consultation is clear that if the proposed amendments are adopted, online retailers and marketplaces will be required to take reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews.

While the CMA is expected to publish formal guidance setting out what it expects traders to do to comply with this obligation, the DBT consultation states that the ‘reasonable and proportionate’ steps traders may need to take include:

having procedures in place to regularly and proactively assess the risk of consumers being exposed to fake reviews;
having policies and procedures in place to detect suspicious reviews;
having policies and procedures in place to remove fake reviews;
sanction users and businesses that commission, facilitate, or otherwise arrange for the posting of fake reviews;
implement a reporting mechanism that allows consumers to report suspicious activity; and
undertake regular evaluations of the effectiveness of their policies, processes, and monitoring systems.

It’s notable that the DBT consultation also clarifies that any review that purports to be left by a consumer when this is not the case would be automatically fake, thereby potentially catching influencers who pretend to have used and be reviewing a product as a consumer when in fact they have been incentivised to endorse or promote it in a way which they have not.

How does the UK approach compare to other territories?

If implemented, these changes would most likely bring the UK consumer protection laws in line with the EU Unfair Commercial Practices Directive, which was recently amended by the Omnibus Directive to introduce a requirement for traders to take reasonable and proportionate steps to check that reviews purported to be submitted by consumers who have actually used or purchased the product originate from such consumers. It also makes it an offence to submit or commission another person to submit false reviews, or misrepresent consumer reviews in order to promote products.

The US has also been taking a tough stance, with the FTC honing in on consumer reviews including failure to disclose material connections between a reviewer and the brand, purchasing fake reviews and suppression of negative reviews. Last year the FTC reached a settlement agreement with Roomster after the company allegedly sold tens of thousands of fake positive reviews to dilute negative reviews posted by actual consumers.

What should businesses do to prepare?

If the government does ultimately press ahead with the proposals outlined in the DBT consultation then online retailers and marketplaces will need to reflect carefully on the policies and procedures that underpin their product reviews – including content moderation. This is particularly the case if AI tools are used to screen and filter reviews that do not comply with the site’s terms of use.

Although some reassurance is given by the clarification that traders are unlikely to be subject to enforcement action on the basis that they publish a single fake review, the proposals set out in the DBT consultation will enable enforcers to take more effective and swifter action against those who mislead consumers through buying, selling, commissioning and publishing false or misleading reviews.

It is also important to note that under the CMA’s proposed new enforcement powers in the DMCC Bill, failure to comply could result in huge fines of up to 10% of global turnover.

In the meantime, stay tuned for the government’s response to the consultation on fake reviews which is expected over the course of the next year while the DMCC Bill passes through Parliament.

-------------------------------------------------

[1] Note that the DMCC Bill revokes the CPRs and moves the operative provisions to Part 4 of the DMCC Bill largely unchanged, save for a few subtle amendments.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2023. Specific advice should be sought for specific cases. For more information see our terms & conditions.

Co-authors: Richard Collie and Emily Rhodes

Written by