Legal Insights

Consumers left holding the bag:
Cosette and manipulation of consumer reviews

By Shaun Temby, Dhruv Saggar & Jasmine Wang

• 11 September 2023 • 10 min read
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Luxury retailer, Cosette, is currently facing allegations that it silenced consumers who purchased possible 'superfake' handbags from their store.

Cosette Legal insights article

Some consumers have accused Cosette of pressuring them to remove negative reviews in exchange for a refund and paying a third party to remove negative reviews and plant positive reviews. These allegations, which came to light though reporting in the SMH and The Age newspaper, follow the trend of consumers increasingly relying on online reviews to inform their purchasing decisions, with some sources estimating that as many as 90% of consumers check reviews before making a purchase.

Given recent action taken by the ACCC to prioritise enforcement action against manipulative reviews, these allegations underscore the importance for businesses to ensure their marketing practices are not misleading consumers by distorting online customer reviews.

Fake reviews and the Australian Consumer Law (ACL)

The ACL explicitly prohibits misleading or deceptive conduct, as well as more general provisions that prohibit businesses from acting in a way that can mislead consumers regarding the quality of goods and services. Effectively, these provisions extend to prohibit businesses from both submitting fake or misleading reviews and incentivising customers to remove their negative reviews.

The generalised provisions play a more critical role for the ACCC in pursuing businesses that may be engaging in more sophisticated review manipulation practices beyond just submitting fake reviews. Importantly, however, it is the specific prohibitions, including (for example) from making false representations as to the testimonial of any person or the quality of goods or services that attract civil penalties.

ACCC investigations

In December 2013, the ACCC released its guidance for online product reviews and expressed concerns about an increase in paid-for and fake reviews. Since the publication of that guidance, there have been several investigations and court decisions concerning businesses posting fake reviews, including the following:

EuroSolar and Australian Solar Panel

January 2014This is the first litigated outcome concerning publishing false testimonials under the ACL. EuroSolar and Australian Solar Panel published YouTube video testimonials and written testimonials that were from someone other than genuine customers.

The Court declared that EuroSolar and Australian Solar Panel contravened the ACL and ordered a penalty of $125,000 against the company and $20,000 against the director for his involvement in the conduct.

Citymove Pty Ltd

July 2015The ACCC issued infringement notices (with penalties totalling $30,600) following its investigation into Citymove fabricating customer identities to post two positive testimonials on Google+ and one positive testimonial on YouTube.

Electrodry Carpet Cleaning franchisor

December 2015Electrodry posted several fabricated testimonials on the internet and induced its franchisees to post false reviews about Electrodry on Google, True Local, and Yelp. The Court held that Electrodry breached the ACL and ordered that it pay a penalty of $215,000.

From 2015, the ACCC began to target businesses that may not have themselves been posting fake reviews but instead engaged in conduct that manipulated the review process. These investigations include the following:

True Value Solar

April 2016True Value Solar ceased offering its customers incentives for publishing positive online reviews following an investigation by the ACCC. The ACCC said businesses that offer incentives for unbalanced positive reviews risk misleading consumers and breaching the ACL.

True Value Solar paid a penalty of $13,200 and provided an undertaking to the ACCC to implement a trade practices compliance program to ensure similar conduct did not reoccur.

Aveling Homes

November 2017Aveling Homes misrepresented that two review sites were affiliated with the "independent” service (known as when they were, in fact affiliated with Aveling Homes. Further, Aveling Homes held back bad reviews from its review website to give a more favourable impression of its services.

The Court ordered penalties totalling $380,000 against the company and penalties totalling $25,000 against the marketing manager for his involvement in the conduct.

Meriton Apartments

November 2017Meriton participated in a TripAdvisor feature where Meriton would provide past visitor’s email addresses to TripAdvisor, and TripAdvisor would send out emails prompting past visitors to leave a TripAdvisor review. For guests that Meriton thought were more likely to give bad reviews, Meriton did not send the guests’ email addresses to TripAdvisor or altered the email addresses so that the selected guests would not receive emails from TripAdvisor.

The Court found that Meriton’s conduct resulted in reviews about it on TripAdvisor’s website that created a misleading impression concerning the quality of Meriton’s services. The Court ordered penalties of $3 million.

Service Seeking

July 2020Service Seeking had a Fast Feedback feature that, in effect, enabled businesses to rate and review themselves. The Fast Feedback feature emailed to customers reviews drafted by businesses and, if the customer did not respond to the draft review within three days, the review was automatically published.

The Court ordered Service Seeking to pay $600,000 in penalties for making false and misleading representations regarding reviews of businesses that were offering services on the platform.

Recent ACCC action

Between July 2020 and 2022, the ACCC took no significant public action to investigate or prosecute fake or misleading reviews. However, in its annual enforcement priorities announcement last year, the ACCC identified this conduct as a priority and committed to tackling deceptive advertising that distorted consumer choice, particularly the manipulation of online reviews.

In October 2022, the ACCC announced that it would review at least 100 businesses as part of an internet sweep targeting fake or misleading online reviews and testimonials. In January 2023, the ACCC announced that it would be starting a sweep to identify misleading testimonials and endorsements by social media influencers, following the receipt of tip-offs from the public. The ACCC has not yet published the findings of these two sweeps.

Key takeaways

The negative media attention to which Cosette was subjected shows that the public is increasingly concerned about how vulnerable they are to manipulated online reviews. At the same time, the ACCC has made this conduct an enforcement priority and is sweeping the internet for businesses that it can make an example of.

The ACCC’s renewed focus and historic investigations make it clear that it is not enough that businesses avoid writing fake reviews. Instead, businesses should holistically monitor their practices to ensure that they are not encouraging customers to post positive reviews and disincentivising customers from writing negative ones. If your business publishes customer reviews, ratings and testimonials, they must be genuine, unaltered and free of any improper influence.

By Shaun Temby, Dhruv Saggar & Jasmine Wang

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