The $3 million fine issued to Meriton this month by the Federal Court might be a wake-up call to other businesses to consider their management and interaction with online review websites.

Meriton participated in the TripAdvisor service called "Review Express" where accommodation service providers send an email through TripAdvisor to prompt them to review their stay.

TripAdvisor suggests the email prompt increases the likelihood of a person leaving a review, on average, by at least 30 per cent. Indeed, Meriton's own internal research after implementing the services showed there had been 65 per cent more reviews per property per month and a corresponding increase in page views per month. So, no doubt, services and sites such as these are powerful tools.

The court found that Meriton had adopted a systemic practice across its properties in Queensland and New South Wales, whereby the email addresses of guests who had made a complaint or were otherwise considered likely to have had a negative experience at the property, were not sent the reminder. Over the period of 1 April to 31 December 2015 for instance, 14,584 emails were masked, the court concluding that the overwhelming majority related to guests that complained. This did not include the emails that were 'bulk' removed as they were considered likely to have had a negative experience. The court emphasised the 'vast scale' of the practice when delivering its judgment.

Meriton did this by either withholding addresses in bulk during periods of time where there had been a major service disruption (for example, no working lifts or hot water) OR altering the email addresses of certain guests before sending to TripAdvisor, rendering their email address invalid. This process was eventually even built into the software utilised by the business. There was evidence that the policy was heavily enforced by head office, for example, if negative reviews did make their way to TripAdvisor via the Review Express service, the property would be emailed asking why they did not mask the review.

This practice was against the TripAdvisor rules and the court found, was also misleading and deceptive. In particular, it was likely to mislead the public as to the characteristics and suitability of the services provided by Meriton.

Interestingly, the ACCC called as an expert witness a professor who prepared two reports dealing with matters including the impact of online reviews on purchasing decisions, the effect of automatic email invites leading to posting of an online review, and the likely effect of both Meriton using masking practices and using the service as intended.

In taking part in services such as TripAdvisor's "Review Express", businesses should keep in mind:

  • Privacy and Spam Act requirements – has the individual consented to receiving the email from the third party, in this case TripAdvisor, and/or the provider?
  • the reviews (or in the case of Review Express, the email addresses submitted) should be those of genuine customers
  • the customers should not be offered incentives for reviews (unless the incentives offered were able to be sufficiently disclosed)
  • as in the case of Meriton, do not engage in practices designed to select which reviews will be published and those that will not
  • customers should not be pressured to remove a negative review or to remove the review in exchange for a discount or incentive
  • failing to take steps to respond to or potentially remove a misleading review made by a reviewer could also constitute misleading and deceptive conduct.

The court ordered that Meriton should pay a $3 million fine in view of: the nature and extent of the acts and omissions (including the practice was across the whole organisation, there was a large number of masked emails, and the practice was deliberate and systemic and took place over a period of 11 months); the size of Meriton's business which suggested a large penalty was required for specific deterrence; the deliberateness of the conduct; involvement of senior management; and lack of demonstrated compliance culture.

The court also granted an injunction to the effect that Meriton would not, for a period of three years, filter, select or limit guest email addresses supplied to TripAdvisor "Review Express" (unless a guest consents to withholding or requests Meriton to withhold, or such conduct accords with TripAdvisor's own published rules or guidelines). In addition, Meriton will be required to establish and maintain a compliance program for a period of three years.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.