Legal Guide to Online Reviews, Testimonials & Endorsements

Last updated: 12 November 2024

Legal Guide to Online Reviews, Testimonials & Endorsements – Online reviews and testimonials are powerful business tools that allow customers to share their experiences openly. Businesses should manage online ratings and reviews carefully to safeguard their reputation, prevent misleading customers, and comply with Australian laws.

Click on any of the questions below to jump to that section of this legal guide.

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Online Review Regulations

What are the Australian Consumer Law requirements for online reviews and testimonials?

Here are the basic requirements for online reviews and testimonials to comply with Australian Consumer Law (ACL) regulations:

1. Reviews should be genuine opinions from real customers.
2. You can offer discounts or benefits for reviews, but always ensure that any benefit or enticement is disclosed.
3. Do not create fake reviews or pay someone else to do so.
4. You cannot include only the positive reviews but must include ALL reviews (good and bad).
5. You cannot amend or edit any part of the review.

Who regulates online reviews in Australia?

The Australian Competition and Consumer Commission (ACCC) regulates online reviews and enforces Australian Consumer Law (ACL), which covers misleading or deceptive conduct and false or misleading representations. It also provides guidelines for business owners, such as prohibitions against dishonest practices and lack of transparency in review management.

Who cannot post testimonials to promote their business?

If you are part of the Australian Health Practitioner Regulation Agency (AHPRA), you cannot post testimonials on your website. They state: “The National Law does not allow the use of testimonials or purported testimonials to advertise regulated health services or a business that provides a regulated health service” (source).

This regulatory requirement and prohibition on posting testimonials do not impact the following:

• Patients sharing information or expressing their views online
• Discussion forums, or
• Non-regulated health services.

When does an Australian online business need to follow the FTC guidelines?

The United States FTC’s International Consumer Protection program is dedicated to protecting American consumers worldwide. All Australian online businesses must follow the FTC regulations if they market or sell products or services to US customers. Businesses must also abide by local laws in any country where they market or ‘do business’.

Fake Reviews and Testimonials

Is it illegal to post fake reviews online?

Yes. Fabricating fake reviews is a breach of Australian Consumer Law (ACL), which protects people by stopping the spread of misleading information. Focus on trust, encourage honest feedback, and post all reviews to help potential customers make better decisions about your products or services.

Is it illegal to ask for a 5-star review?

No, asking customers for reviews is not illegal in Australia. However, all reviews must be genuine opinions, and customers must not be coerced into giving only positive ones. Australian law ensures that customers can provide honest opinions regarding the businesses they deal with and that these reviews must be posted without editing. Any misleading claims are not allowed.

You must post ALL reviews, no matter what the rating is, and you cannot post only 5-star reviews.

Can I tell customers what to say?

No, you cannot dictate to customers what to write in their reviews. You are not permitted to provide a ‘template’ response in any manner but must let customers either nominate a rating and/or otherwise write a freeform review.

Can I edit a review and bend the truth?

No. In Australia, it’s against the law to change reviews without the author’s permission. If you do, you could face serious consequences, depending on how severe the violation is. Instead of editing negative reviews, address concerns openly and try to address any issues raised. People reading the review will better understand the issue and can make their own determination.

What is review hijacking?

Review hijacking occurs when competitors take your positive reviews and pass them off as their own to trick customers. This is a sneaky move by sellers who transfer authentic reviews from one product to their own. An example is associating unrelated products with well-rated listings or combining listings to leverage existing customer reviews. This is a breach of the law and should be reported to the Australian Competition and Consumer Commission.

What are the legal consequences of posting fake testimonials?

Posting fake testimonials can have serious legal consequences, such as:

• Fines and Penalties: They vary in severity and can significantly harm your business.
• Reputational Damage: If you get caught using fake reviews, it can damage your credibility.
• Compliance Regime: The ACCC can require you to commit to an independently audited annual review regime, which means an independent body monitors and reports on you and your team for several years. This can result in time and significant expense for your business.

What is the fine for posting fake reviews?

If you post fake reviews in Australia, you could face substantial fines. The exact amount of the fine depends on factors such as the scale of the deception, the impact on consumers, and whether the business has a history of similar conduct.

For example, in 2016, the ACCC fined Electrodry $215,000 for encouraging its franchisees to post false online reviews to boost their ratings on review websites. Additionally, in 2011, the removalist business Citymove was fined $6,600 for creating misleading online ‘customer testimonial’ reviews. Then, in 2023, Star Plus Group Pty Ltd, an electrical and plumbing business, was fined $125,000 for collaborating to collude and mislead customers by publishing fake reviews.

Paying for Reviews, Testimonials, or Endorsements

Is it illegal to pay for a 5-star review?

No. In Australia, it is not illegal to pay for a review. But you must disclose any type of “incentive” provided for a review, whether financial, free products, free services, free advertising or any kind of benefit.

Paying customers for a positive review when they didn’t have a positive experience will get you in legal trouble, as will not disclosing that they have received payment or any form of incentive to give the review.

Can I give out free products for testimonials?

Yes, but be transparent and clearly state if a testimonial was given in return for a free product. You need to disclose any type of incentive or benefit you have provided in return for a testimonial. You must also disclose any close relationship with any reviewer, including family or friends.

Avoid requesting only positive reviews; let people express their honest opinions. You need to post all reviews and testimonials, both positive and negative, for a well-rounded, genuine and honest perspective and to ensure you comply with the law.

Can I offer a discount in exchange for an online review?

Giving discounts for online reviews is not illegal – consumer law does not ban offering discounts or other incentives in return for reviews. However, the Australian Competition and Consumer Commission (ACCC) has guidelines you must follow:

• Reviews must be honest and transparent.
• You must disclose any and all incentives, whether financial or otherwise.
• You must disclose any online reviews that are provided by ‘related parties’ such as friends or relatives.

How can I legally incentivise customer reviews?

Online reviews are an excellent strategy to attract potential customers. While offering incentives is not illegal, do not use it to make them give you only positive reviews. If you request reviews in return for a benefit or incentive, customers must be permitted and encouraged to write genuine and honest reviews, whether they give good or bad reviews.

Disclosing Relationships

Is it illegal for friends and family to write online reviews?

No. It is legal for friends and family to share their experiences through online reviews in Australia. However, you must disclose when and where a family member or friend has written an online review about your business products or services.

Is it illegal for employees to write testimonials?

No. Sharing stories from happy employees is like sharing family stories with customers. Remember, let them speak from the heart without any pressure. Respect their choice to join in, and keep their words accurate to their experiences. You should, however, disclose the relationship when posting the testimonial.

How do I legally disclose relationships in testimonials or sponsored content?

Running an online business often includes using testimonials and sponsored content. However, you have to disclose any personal or paid business connection you have with the person giving the reviews. Ensure transparency by legally disclosing your relationships. Here’s what you need to do:

Be Upfront About Any Connection: You must disclose any relationship with the person providing reviews to maintain transparency and trust. This includes if they received the product or service for free, got paid to promote it, are a relative, colleague or friend, or have any other kind of commercial affiliation with your business.

Make it Clear and Easy to Understand: Don’t bury the disclosure in fine print or vague language. The person promoting your product should use clear disclosure terms like “sponsored content”, “ad”, or “thanks to [Brand Name] for providing this product”. For any related parties, you should state this underneath the testimonial itself.

Put it Where People Can See It: The disclosure should be prominent and easy for people to find. This means placing it within the testimonial itself, not hidden away in a caption or hashtags where possible. For videos, consider adding a disclosure at the beginning and in the description.

For example, you’re the proud owner of a bakery, and a well-known food blogger bought your sourdough bread. They write a glowing review on their blog, mentioning they received a complimentary loaf of bread from your bakery in exchange for sharing their honest opinion. A clear disclosure could be: “I was given a complimentary loaf of sourdough as an incentive for this review. All opinions are my own”.

What are the legal risks of undisclosed sponsored reviews?

There are legal risks involved in failing to disclose a sponsored post, including:

Misleading Consumers: Australian Consumer Law (ACL) protects consumers from misleading or deceptive conduct. When a review doesn’t mention it’s sponsored, consumers might believe it’s an objective opinion from a genuine customer. This is a breach of the ACL when you do not disclose any sponsored testimonials and also when the advertiser/influencer does not disclose that their post is sponsored.

Breach of ACCC Guidelines: The Australian Competition and Consumer Commission (ACCC) has guidelines for testimonials, which state that any material connection between the reviewer and the business should be disclosed. This includes incentives offered, free products, sponsorship, and personal relationships. Not following these guidelines can lead to enforcement action by the ACCC.

Damage to Your Reputation: Your customers may lose their trust in you if they believe or discover you are concealing disclosure around a positive review. This could cause substantial damage to your business, and you may lose customers.

Transparency builds trust. Even if a review isn’t glowing, respond to it in a considerate, honest and helpful manner. Consumers will appreciate your honesty and be likelier to do business with you.

Negative Reviews

Can I delete negative reviews?

No! In Australia, you can’t delete or amend negative reviews. The ACCC considers deleting reviews misleading to consumers if it removes a balanced and honest view and experience of your business products or services.

Think of online reviews as a means for potential customers to hear honest feedback from your past customers. You can’t silence everyone who might have a bad or less positive experience.

However, there are some situations where you might be able to get a negative review removed:

• If It’s Defamatory: This means the review is untrue and damaging to your reputation. You can send a legal letter asking the reviewer to take it down – but it’s best to consult a lawyer before you do this.
• If It’s Fake: If you can prove the review is from someone who never interacted with your business, most platforms will remove it when you lodge a removal request and can show it was not an honest review.
• If It Breaches Terms of Service: Most review platforms have rules against spam, offensive language, and threats. If the review breaks these rules, you can flag it for removal directly with the platform that has posted it.

Here are some tips for dealing with negative reviews:

• Respond Professionally: Thank the reviewer for their feedback and explain what you’re doing to address their concerns. This shows other potential customers that you take feedback seriously.
• Don’t Get Defensive: Defending your view or position and potentially getting into an argument with the reviewer online will only make things worse and reflect poorly on you.
• Take the Conversation Offline: If you can resolve the issue, suggest taking the conversation to email or phone and making honest efforts to resolve any complaints.
• Use the Feedback in a Positive Manner: It may lead to business improvements and better service!

Even though you can’t delete negative reviews, by responding professionally, you can show potential customers that you care about their experience and are willing to work to fix any problems or issues.

Can I sue someone for a bad review or defamatory statements?

If someone leaves a negative review, you cannot sue them if it is a genuine and honest account of their experience. However, if they make defamatory statements that are untrue and harmful, you can consider taking legal action. Before doing so, it’s essential to fully understand the legal situation and consult a legal professional.

Defamation is critical. If someone has made false and harmful comments about you or your business, you might have a case for legal action. The online review may constitute defamation if you can prove these four elements:

1. The comments were communicated to others (via online review platforms or social media).
2. They clearly identify your business.
3. The review damages your business and reputation.
4. The comments were false and untrue.

But remember, truth is a defence: If the statement is true, even if it’s negative, it does not constitute defamation. People can express their opinions within reason.

You’ll need to prove that the defamatory statement resulted in tangible harm, such as financial loss or damage to your reputation. For example, if someone posts a fake online review claiming your restaurant made them severely ill. The review damages your reputation and could result in financial loss.

However, taking defamation lawsuits can be costly and time-consuming. They are also very difficult to prove or provide evidence for. In addition, going public with a lawsuit could actually bring more attention to the negative review or issue. Sometimes, reaching out to the reviewer directly and asking them to delete the review is the better option.

If you still plan on filing legal action, here’s what you should do:

• Prepare the Evidence: Be sure to save copies of the review and any chats you’ve had with the reviewer.
• Consult a Lawyer: A lawyer can help provide insight tailored to your situation, help gauge your likelihood of success and whether it is worthwhile to pursue.
• Consider Your Choices Carefully: Before making any significant choices, consider the expenses, potential benefits, and impact on your business.

Remember, dealing with negative reviews is part of the game when you’re in business. Most of the time, the best approach is to tackle the issue directly with the reviewer and focus on providing top-notch service in the future.

Can I pay someone to remove a bad review?

No, you can’t pay anyone to erase a negative review in Australia. It’s illegal for both you and the reviewer.

The Competition and Consumer Act 2010 (CCA) bans deceptive behaviour regarding reviews. Paying to remove an honest, even negative, review can mislead consumers and harm your business’s credibility. The Australian Consumer and Competition Commission (ACCC) enforces the CCA and does not permit businesses to manipulate online reviews. They can impose hefty fines for any breaches. Additionally, reviewers can’t be offered money or other incentives, such as free products or services, to remove a negative review.

When presented with a negative review, the best course of action is to:

• Respond to the review professionally and politely. Acknowledge the reviewer’s concerns and try to resolve the issue.
• Flag factually incorrect reviews for further action. On most platforms, you’ll find guidelines and reviews violating them, which may be requested to be removed to maintain a fair and trusted environment.

Can I ask someone to post a bad review for my competitor?

No. Despite intense competition, there are legal and ethical reasons why you shouldn’t encourage someone to write a bad review about your competitor. You should consider the potential impact of doing so:

• Sued for Defamation: If a negative review you solicit turns out to be false or misleading and damages your competitor’s reputation, you could be sued for defamation. This can lead to hefty fines and could even damage your own business’s reputation.
• Fines and Penalties: The ACCC’s guidelines forbid deceptive practices like fake reviews, which can result in legal repercussions for businesses, such as fines and penalties.
• It Backfires More Often Than It Works: Potential customers can quickly identify fake reviews. Generally, they can smell inauthenticity a mile away. If they spot a questionable negative review that links or promotes your business instead, it could harm your reputation by association.
• Focus on Building Your Positive Reputation: To stay competitive, prioritise delivering excellent service and establishing trust with your customers. Ask your happy customers to share honest and helpful feedback, which can assist potential clients in assessing your products or services and promoting your business.

A strong base of positive reviews is a much more effective and sustainable strategy than trying to undermine your competitor.

How can I clean up my Google reviews?

Here are some strategies to handle your Google reviews and build a positive online presence for your business.

• Respond to All Reviews: Thank your happy customers for their feedback and acknowledge their positive experiences. Even a short “thanks for your business” shows appreciation and engagement.
• Address Negative Reviews: Don’t shy away from negative reviews! Respond professionally and politely. Acknowledge the customer’s frustration, try to understand what went wrong and offer to contact you directly so you can attempt to fix it. This shows them that you take customer service seriously and are willing to rectify problems that arise.
• Flag Inappropriate Reviews: If a review violates Google’s guidelines (e.g. offensive language, spam, irrelevant content), you can flag it for removal. Google will then review the content and decide whether to remove it.
• Encourage Positive Reviews: If you provide excellent service, this will occur. Ask happy customers to share their positive reviews to boost credibility and build trust in your business. After positive interactions have taken place, you can send a ‘thank you’ email and a Google review link and ask the customer to provide a review.

By following these steps, you can take control of your online reputation and use Google reviews to your advantage.

What should I do if I’m threatened with a bad review?

Being threatened with a bad review can be stressful, but there are steps you can take to address the situation and potentially reverse it. Here’s what you should do:

1. Stay calm and assess the problem. Ask yourself if the concerns of the customer are reasonable.
2. Save any threatening messages as evidence.
3. Offer a genuine apology and ask what may be done to resolve the issue, trying to understand their issue and points of view.
4. Be transparent and consistent about your company’s refund policies. If you state that you do not offer refunds for services rendered and make an exception for an irate customer with an unfounded issue out of fear of a negative review, you could upset existing customers.
5. Resist pressure tactics used against you and your business. Learn to identify whether a customer’s complaints are fair or overstated and take measures to address these. Avoid conceding to unreasonable demands for the sake of a review.
6. Report extortionate threats that violate the terms of service of the review platform.
7. Consult legal advice when you encounter what you believe may be blackmail or intimidation threats to determine appropriate action.

Most businesses cannot avoid negative reviews. So, remember to respond professionally and non-emotionally, showcasing your commitment to customer service.

How should I respond to a fake negative review?

Don’t get flustered! Here’s how to tackle a fake negative review:

1. Gather evidence. Is the reviewer a verified customer? Do the details in their review line up with your business offerings? Check for inconsistencies that can help you identify a fake review.
2. Check their other reviews on Google to see if they are using a consistent practice to intimidate (or even are paid!) to do the same thing to other businesses.
3. Respond calmly and professionally to fake reviews. Thank the reviewer and politely correct any inaccuracies in their feedback, including if they are not and have never been a customer.
4. Report them as fake on appropriate platforms, explaining why it’s not genuine according to community guidelines.
5. Invite the reviewer to discuss concerns privately. This will demonstrate openness when resolving an issue for potential customers or otherwise will expose any fake customer reviewers.

By following these steps, you can effectively address fake reviews and protect your business’s reputation. Honest feedback matters the most. Ask satisfied customers for positive reviews, as they even out any negatives and keep things fair.

We hope you found this Legal Guide to Online Reviews, Testimonials & Endorsements in Australia helpful.

References

1. Australian Competition and Consumer Commission v A Whistle & Co (1979) Pty Ltd [2015] FCA 1447 URL
2. Commissioner for Consumer Affairs (SA) v Star Plus Group Pty Ltd (in liq) [2023] FCA 778 URL
3. ACCC v HealthEngine Pty Ltd [2020] FCA 1203 URL

About the Author: Vanessa Emilio

Vanessa Emilio (BA Hons, LLB, ACIS, AGIA) is the Founder and CEO of Legal123.com.au and Practice Director of Legal123 Pty Ltd. Vanessa is a qualified Australian lawyer with 20+ years experience in corporate, banking and trust law. Click for full bio of Vanessa Emilio or follow on LinkedIn.

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