Australia: Fake customer testimonials - ACCC’s claim succeeds

The Australian Competition and Consumer Commission (ACCC) has succeeded in its first claim pursuant to section 29(1)(e) of the Australian Consumer Law (ACL), which prohibits the making of false or misleading representations purporting to be testimonials relating to goods or services. This prohibition was introduced on 1 January 2011, and exposes companies to potential pecuniary penalties. In ACCC v P&N Pty Ltd & Ors [2014] FCA 6, three solar panel suppliers who represented that written and video testimonials published on their company websites and on YouTube were given by customers, when in fact they were not genuine customers, were found by the Federal Court of Australia to have contravened section 29(1)(e) of the ACL. This was also found to be misleading or deceptive conduct, in contravention of section 18 of the ACL.

The three solar panel suppliers were also found to have contravened section 29(1)(k) of the ACL, which prohibits the making of false or misleading representations concerning the place of origin of goods. The companies had represented to consumers through the use of the words "Australian Solar Panel", including in a trading name and logo, that the solar panels they were promoting were made in Australia, when in fact they were made in China. Those false or misleading representations were made in various media, including television commercials, newspaper advertisements and on their websites. Again, this was also found to be misleading and deceptive conduct in contravention of section 18 of the ACL.

A director of two of the companies was found to have been knowingly concerned in, or party to, their contraventions of the ACL. The Federal Court made orders for the publication of corrective notices, injunctions, and pecuniary penalties against the three companies and director totalling $145,000. Our firm acted for the ACCC in this proceeding.

This case serves as a timely reminder to businesses to ensure that conduct relating to customer testimonials, reviews and ratings, especially online and in social media, is not false, misleading or deceptive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.