The Competition and Markets Authority (CMA) expects online trader recommendation platforms (TRPs) to take action against businesses that try to boost their ratings based on fake or misleading reviews. But some businesses may fight back – arguing that the TRP was wrong to impose sanctions and even that they have suffered significant harm as a result. How can TRPs strike the right balance here?
What are TRPs and what does UK law say about fake reviews?
What are trader recommendation platforms (TRPs)?
Trader recommendation platforms or TRPs are websites or apps that host reviews of businesses by consumers. Consumers like them because it helps them to find out what other consumers thought about a business they may be thinking of buying from (indeed, some TRPs also require businesses on their platform to go through a vetting process before they can feature on the site or the app). Businesses like them because they help to generate leads – especially from customers such as homeowners where the scope to get repeat business (e.g. for building work) is typically limited. There is significant variation in business models, with some TRPs charging by reference to leads generated, whilst others use a subscription model. And whilst some, such as Trustpilot, provide reviews on a wide range of businesses, others - such as Checkatrade, Rated People, Trust A Trader or MyBuilder - focus primarily on SMEs such as electricians, plumbers and builders targeting homeowners. Other examples of UK TRPs include Google, Amazon Home & Business Services, MyJobQuote, Air Tasker, Which? Trusted Trader, Yell.com and carehome.co.uk.
What does UK law say about fake reviews?
As well as outlawing the commissioning or posting of fake or misleading reviews, the Digital Markets, Competition and Consumers Act 2024 imposes a new requirement on publishers of reviews. This applies not just to businesses that host reviews of their own products or services on their own websites, but also to TRPs. Such publishers are obliged to take reasonable and proportionate steps to prevent the publication of fake or misleading reviews. For more detail on exactly what taking "reasonable and proportionate steps" involves, see our briefing here.
But for the purposes of this briefing, the key point to note is that it is likely to require TRPs to take action against a business that is found to have posted a fake review itself, or commissioned others to do so on its behalf. Using voluntary undertakings recently given to the CMA by Google as a guide, appropriate sanctions might include the following:
- removing the fake reviews, displaying a warning notice against
the business and suspending new reviews for a period (e.g. 30
days); and
- for repeat offenders, as above but blocking access to all reviews for a longer period (e.g. 60-120 days) and ultimately considering whether the business should be barred from the TRP.
What's the problem for TRPs?
Although TRPs are free to set their own rules as to how to deal with fake reviews, these are likely to involve a significant element of contractual discretion – for example, in deciding whether the evidence on fake reviews is strong enough to justify imposing sanctions on a business featured on the platform.
The law on contractual discretion
It's well established that courts require a contractual discretion to be exercised honestly, in good faith and in a manner which is not arbitrary, capricious or irrational. In practice, this normally imposes some level of constraint on how far the party exercising its discretion can go. Indeed, following the Supreme Court's ruling in Braganza v BP (2015), the English courts have shown an increasing willingness to subject parties' decision-making on contractual discretion to fairly detailed scrutiny (see this briefing for a recent example).
All this means that there is likely to be scope for businesses to challenge the imposition of sanctions by TRPs – and given the importance of consumer ratings to many businesses, some may have a strong commercial incentive to bring such challenges. As a result, TRPs will need to strike a careful balance between taking action against fake or misleading reviews, as the CMA would like, and the legitimate interests of businesses on the platform (which are, after all, the TRPs' customers).
How can TRPs strike a fair balance?
The CMA recently obtained undertakings from Google to take various measures designed to address fake reviews on its platform. Among other things, these require Google to apply sanctions to businesses which – in Google's view - meet an (as yet undisclosed) "Sanctions Threshold" as regards their apparent involvement with the appearance of fake reviews. However, the CMA appears to have accepted that it would not be fair for sanctions to be applied without businesses having a right to appeal Google's decision. It also appears to have accepted that in the case of a business' "first offence", Google is:
- not required to apply the sanctions immediately – which
would potentially allow the business a period in which it could
make representations in response to the initial sanctions decision;
and
- if there is an appeal by the business, the sanctions could be suspended for a further period – but not indefinitely i.e. if the appeal is not concluded within a reasonable time (as yet undisclosed), Google will be required to apply the sanction.
However, in the case of businesses which have met the "Sanctions Threshold" previously (i.e. it is not a "first offence case"), sanctions must be applied immediately - even if there is an appeal.
The undertakings also impose a general obligation on Google to ensure that any appeals process "does not undermine the effectiveness of the Sanctions Measures" in helping to prevent fake and misleading reviews from impacting the decisions of UK consumers.
Should all TRPs adopt this approach?
Whether a court would agree that this approach meets the standard required by the case law on contractual discretion remains to be seen – and its view, rather than that of the CMA, would be what really counts here. However, the Google undertakings do at least provide other TRPs with an indication of where the regulator thinks the balance lies between due process for businesses and taking effective action against fake reviews. Indeed, by publishing the undertakings, the CMA may well have been seeking to establish a broader precedent for the sector.
That said, what is appropriate for Google will not necessarily be appropriate for all TRPs – so none of the above excludes the possibility that alternative approaches to striking a fair balance as between the duty to prevent fake reviews and the rights of business could be justified.
When did the duty to prevent fake reviews come into effect?
The statutory obligation on TRPs and other publishers to take reasonable steps to prevent fake reviews (contained in the Digital Markets, Competition and Consumers Act 2024) came into force on 6 April – although the CMA takes the view that TRPs were already under an obligation to take such action based its interpretation of on existing legislation. As a result of the Digital Markets, Competition and Consumer Act 2024, the CMA also has much stronger enforcement powers, including the ability to impose fines of up to 10% of turnover for infringements of consumer law (see this briefing).
How we can help
We can help you to ensure that your processes for detecting and preventing fake reviews are likely to meet regulators' expectations whilst at the same time allowing appropriate due process for businesses featured on your platform. We can also help you to ensure that your business is well equipped to handle CMA interventions (we expect it to be taking a keen interest in what action TRPs are taking to prevent fake reviews). To find out more, please speak to any of the contacts listed below.
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.
