Astroturfing
3.3 The Competition ActThe misleading advertising provisions of the Competition Act (the Act)Footnote 18 prohibit advertisers from making a representation, by any means whatever, that is false or misleading in a material respect,Footnote 19 and further provide that the general impression conveyed by the representation be taken into account.
3.4 The problem with astroturfingConsumers read online reviews to research the pros and cons of a product, and they highly value the genuine experiences of other shoppers. Insofar as the general impression is concerned, there can be little doubt that consumer reviews are seen to reflect the authentic experiences of impartial consumers.
This makes perfect sense. Canadians expect consumer reviews to be just that: reviews expressing the real experiences of genuine customers.
What would consumers make of glowing user reviews if they were revealed to have been written by people who had never used the product and, furthermore, may have been paid to write the reviews? Clearly consumers would dismiss such opinions outright as false and deceptive.
What if those same positive comments had been composed by employees of the company? Companies and their employees clearly have a vested interest in positive consumer reviews of their product, and are likely to be perceived as biased and lacking adequate impartiality, and therefore less likely to provide a balanced review. As such, consumers may attach less weight to the reviews when they know that they lack independence.
When it comes to the materiality of consumer user reviews, there is no shortage of evidence indicating that user reviews are an important resource for consumers looking to make informed choices, and that businesses are increasingly concerned about their online word‑of‑mouth reputations.
Surveys have shown, for instance, that a majority of consumers find online sources trustworthy for product reviews and have changed their minds about purchases based on online information or have had their decision to purchase confirmed by a favourable review.Footnote 20
On the business side, research shows that an increase in review scores may allow businesses to raise prices and still maintain market share, and that an increase in online reputation can lead to an increase in customers.Footnote 21
In terms of the authenticity of testimonials, Bureau guidance on the subject explains that consumers will assume that a consumer offering a testimonial had actually used the product before commenting on it, and indicates that "...consumers are more likely to accept representations about products made by other consumers when apparently based on practical use and conveyed with a candor that may itself vouch for the reliability of the representations."Footnote 22
In addition to the need for the review to be authentic, the guidance also underlines the importance of impartiality, indicating that problems arise with what appear to be third party testimonials when there is an undisclosed material connection, financial or otherwise, between the third‑party and the advertiser, such as an employee. These material connections are relevant, even if the person provides an honest and unbiased review, because consumers highly value the independence of third‑party opinions.
Advertisers, or those with whom they have a material connection, who are considering posting consumer reviews about their own products or those of a competitor may wish to ask themselves whether the reviews create the general impression that they represent the authentic experiences and opinions of impartial consumers. In thinking about the impression created, advertisers are encouraged to consider the context within which the review is likely to be displayed. Part of the consideration of the context would include whether it allows the review to be separated from any disclosure of a material connection.
Among the many and varied channels through which a person may receive information, it is hard to imagine any that carry the credibility and, thus, the importance of interpersonal communication, or word of mouth. There is good reason to believe that it has more potential impact than any other communication channel.Footnote 23
3.5 International spotlightAstroturfing is a problem that crosses borders and threatens the integrity of online commerce globally. It occupies an increasingly central spot on the radar of most major law enforcement agencies and international organizations tasked with addressing issues associated with deceptive and misleading marketing practices.
The Bureau has excellent working relationships with its international partners and strives to keep informed of their experiences in this area, as well as participating in various international fora where the subject is addressed and discussed.
In terms of the activities of individual agencies, in October 2009, the U.S. Federal Trade Commission (FTC) revised its guides relating to the use of endorsements and testimonialsFootnote 24 to include examples of endorsements conveyed by bloggers or other "word‑of‑mouth" marketers that would constitute "material connections" between advertisers and endorsers that must be disclosed. The accompanying guidelines explain that a connection between the endorser and the marketer of the product, that would affect how people evaluate the endorsement, should be disclosed.Footnote 25Significant enforcement activities have continued since the revision of the Guides.
In September 2013, the New York State Attorney General completed an undercover investigation into the "reputation management industry" and the practice of astroturfing. The investigation found that some reputation management companies and SEO companies, responding to businesses increasingly concerned with online reputation, were using advanced techniques to hide identities and set up bogus online profiles in order to flood review platforms with fake customer reviews. Nineteen companies agreed to pay more than $350,000 in penalties following the investigation.Footnote 26
Transparency and impartiality are central notions in the Australian Competition and Consumer Commission's guidance relating to online reviews. Businesses are required to be open and transparent about commercial relationships that could impact reviews, and reviews could mislead consumers if presented as impartial when in fact they are written by the company or third parties who have received some form of compensation.Footnote 27,Footnote 28
In February 2015, the United Kingdom's Competition and Markets Authority (CMA) requested public comment regarding online reviews and endorsements.Footnote 29 In the request, the CMA stated that reviews are "playing a growing role in helping consumers to make shopping decisions, including finding hotels, selecting tradespeople and choosing cosmetics." Moreover, they are concerned about the "trustworthiness or impartiality of information in some reviews and endorsements" and are also looking into "the role of media companies, online reputation managers and search engine optimisers". According to a 2014 survey referenced by the CMA, an estimated 81% of UK consumers read customer reviews and 47% read blogs.Footnote 30
Consumer reviews are now a part of everyday decision‑making. Yet, the credibility of reviews is fundamentally undermined when business‑owners commit review fraud, either by leaving positive reviews for themselves or negative reviews for their competitors.Footnote 31
3.6 ConclusionVirtual word‑of‑mouth sites, including company and retailer websites, social media sites and review platforms, together form an invaluable well of rich information that is now clearly the starting point for consumer research. The practice of astroturfing threatens to ‘pollute the well' and thereby compromise this important source of consumer information.
Negative or positive reviews directly affect consumer decision‑making and, furthermore, can be of significant concern to business. Canadians need to know that they can rely on consumer user reviews, and businesses must be permitted to benefit from the legitimate views of their customers without contending with competitors who stack the deck.
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