Positive online reviews and endorsements can be very important for small to medium-sized businesses.
Unfortunately, unscrupulous competitors or those with an ulterior motive can sometimes try to use these tools to their advantage and sabotage these businesses by posting negative fake reviews.
The Competition Bureau Canada is an independent law enforcement agency that ensures that Canadian businesses and consumers prosper in a competition and innovative marketplace. And fake reviews and ensuring truth in advertising in our digital economy are on the Bureau’s radar.
“Generally, anyone who posts fake endorsements or reviews could be liable under the Competition Act,” says Josephine Palumbo, Deputy Commissioner, Deceptive Marketing Practices Directorate, Competition Bureau.
Enforcing the Competition Act is a key responsibility of the Competition Bureau, and the Act’s deceptive marketing provisions prohibit any business from making materially false or misleading claims to promote a product, service or business interest. A ‘claim’, which refers to any marketing material – such as any in-store ads, social media messages, promotional emails, and endorsements, among other things – is ‘material’ if the general impression it conveys leads someone to take a particular course of action, like buying or using a product or service. When determining if such a claim is false or misleading, the courts will consider the ‘general impression’ it conveys as well as its literal meaning.
The Bureau has previously pursued enforcement action related to fake reviews. In 2015, the Bureau concluded that Bell employees were encouraged to post positive reviews and ratings on the iTunes App Store and the Google Play Store, without disclosing that they worked for Bell giving the impression they were independent and impartial consumers. The Bureau and Bell reached a consent agreement, putting an end to the practices, and sending a strong message that this kind of conduct is not tolerated.
And more recently, an investigation resulted in $5.8 million in penalties for FlightHub in 2021 after the Bureau determined the online flight-booking company made numerous false or misleading claims, even penning positive customer reviews to promote its services. Besides the penalties, as part of the settlement with the Bureau, FlightHub was required to remove any online reviews that were posted by or on behalf of the company but appeared to be from customers.
“Anyone who believes they have been misled by fake reviews or who has been approached with offers to post fake reviews, is encouraged to file a complaint with the Bureau using our online complaint form ,” says Ms Palumbo, adding the Bureau addressed the issue of fake reviews in a consumer alert in 2014 and in its Deceptive Marketing Practices Digest in 2015. Besides fake reviews, the Bureau recommends that SMEs contact them if they believe a competitor is engaged in price-fixing, bid-rigging or deceptive marketing. As well, they should be contacted if an SME believes a dominant business in the market is abusing its dominance to harm or discipline its competitors, or that a merger in their market would prove harmful to competition.
Besides fake reviews, the Bureau recommends that SMEs contact them if they believe a competitor is engaged in price-fixing, bid-rigging or deceptive marketing. As well, they should be contacted if an SME believes a dominant business in the market is abusing its dominance to harm or discipline its competitors, or that a merger in their market would prove harmful to competition.
“Enforcing Canada’s competition laws and advocating for increased competition in regulated sectors is good for all businesses,” says Ms Palumbo. “It promotes a level playing field where businesses have an equal opportunity to prosper based on their merits. Fair competition between businesses also drives them to innovate as they seek to attract consumers by offering better products and services than their competitors.”
The Bureau provides many resources to help SMEs comply with the law and avoid potentially devastating consequences of an investigation. These include guidance on establishing a Compliance Program.
In addition, the Bureau provides numerous tips and advice to SMEs to protect themselves from fraud.
To find out more, please visit: https://bit.ly/3g9RBIH
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