Peter Le Guay

Meriton’s 5-star Masking Scheme – ACCC vs. Meriton

Peter Le Guay

18 December 2017

Competition and Consumer Law

Many businesses today rely on social media and positive reviews to attract business. Consumers like to read reviews before staying at a hotel or holiday destination or trying a new product or service. Certain websites such as TripAdvisor, facilitate this process by ranking businesses that have received more positive ratings and reviews more highly than those which have not.  Of course, it is not surprising that some businesses have deliberately attempted to manipulate their reviews/ratings in order to achieve a higher ranking against competitors.  Meriton Property Services Pty Ltd (Meriton) is the most recent organisation to face legal action over such conduct.  In a Federal Court judgment commenced by the Australian Competition and Consumer Commission (ACCC) and handed down on 10 November 2017 by Moshinsky J, Meriton was found to have engaged in conduct that was misleading or deceptive or was likely to mislead or deceive consumers in contravention of the Australian Consumer Law.

Meriton advertises its property services on TripAdvisor and uses the service offered by TripAdvisor called “Review Express” to solicit reviews from guests who stay at their properties.  Meriton was required to provide guests’ email addresses to Review Express, who in turn would send an automated email through TripAdvisor inviting those guests to post a review of their stay on TripAdvisor. Meriton was found to have deliberately masked email addresses of guests who had complained during their stay and withheld email addresses of guests where there had been a major service disruption during their stay. These practices of invalidating and withholding email addresses were adopted as a company policy on the instructions of management.

As a result, over 14,500 guests were not sent an automated invitation to post a review of their stay on TripAdvisor, including guests who experienced only minor issues and where complaints had been resolved.  This was found to have improved the proportion of favourable reviews, lifting apartment rankings and creating a more favourable impression of the standard, quality or suitability of Meriton’s accommodation services and the Meriton properties listed on the TripAdvisor website.  Consequently, consumers searching for accommodation on TripAdvisor were found to be less aware of the frequency and severity of major service disruptions and negative experiences of other Meriton customers, creating an incomplete and inaccurate impression of the service offering.  Consumers relying on these reviews were likely to be misled, with most consumers assuming that TripAdvisor reviews are unbiased and impartial.  The ACCC is seeking pecuniary penalties, declarations, injunctions, corrective publication orders, orders for the implementation of a consumer law compliance program and costs.  As the issue of liability was determined against Meriton in the 10 November judgement, a hearing in relation to the remedies sought by the ACCC will be scheduled to take place in the next few months.

For businesses that rely on favourable reviews or ratings to attract consumers, it is paramount that opportunities to partake in the review process are granted equally across the board.  Businesses who instead adopt selective practices to skew reviews in their favour, may be liable for misleading or deceptive conduct under the Australian Consumer Law and face large penalties, injunctions, the publication of corrective notices and negative media exposure as a result.