Court rules Meriton manipulated online reviews


Posted By on 16/11/17 at 12:41 PM

The Federal Court has found that Meriton Serviced Apartments (Meriton) engaged in misleading and deceptive conduct regarding online reviews of its properties posted on the TripAdvisor website.

Background to the case

TripAdvisor provides a “Review Express” service to participating businesses.  A participating business provides TripAdvisor with the contact details of customers who have consented to receiving a Review Express email from TripAdvisor, inviting customers to submit online reviews about their experiences.

Following an investigation by the ABC, the Australian Competition and Consumer Commission (ACCC) instituted proceedings against Meriton, alleging that from November 2014 to October 2015, senior management at Meriton told staff to either:

  • not provide TripAdvisor with email addresses of guests who they thought were likely to complain (due to infrastructure or other service issues which arose during their stay, such as no hot water, disruptions to phone services, or lifts being out of order); or
  • doctor the email addresses by adding the letters “msa” (an abbreviation of Meriton Serviced Apartments) to the beginning of a customer’s email address, so that TripAdvisor’s email to that customer would bounce (in a process called “masking”).

Towards the end of the period in question, a new property management system (for the management of guest bookings and accounts) was introduced.  Within that program, a field “TA Mask” was created and the letters “MSA” could be inserted into the field, the purpose of which was to prevent the customer’s email address from being provided to TripAdvisor.

Tendered into evidence was an email dated 9 April 2015 from a staff member to a hotel manager regarding a 3 star review left on TripAdvisor.  The email said:meriton online reviews

Good Morning,

Please find below 3 star TA review.

I trust you will investigate and advise before we proceed with responding.

Also note that this is a review express review, it’s a shame it wasn’t masked as it could have been avoided.

Another email (entered into evidence) from a hotel manager to a staff member stated:

Hi <name omitted>,

Please do not sent out any review requests for MSA BJ from 16/4 until 27/4. Phone lines were down during this time and many other issues such as no hot water overnight, lift down on Saturday, leaks etc.

Many Thanks

Further emails entered into evidence painted a similar picture.

Over 14,000 emails were affected by the masking practices during the time period in question.

The ACCC alleged that Meriton’s conduct had the effect of distorting the online reviews and star ratings on TripAdvisor.  Said ACCC Commissioner, Sara Court, “Consumers rely on independent review platforms like Trip Advisor when making purchasing decisions.  If reviews are manipulated to falsely create a more favourable impression about a provider, consumers may choose that provider on the basis of that falsehood over another accommodation provider who has not engaged in misleading conduct.”

Meriton’s response

Meriton denied that the masking practices misled consumers, and argued that:

  • it encouraged guests in various ways to post reviews on TripAdvisor, including by displaying information about TripAdvisor in all guest rooms, at reception desks and in flyers provided to guests;
  • the use of the masking practices was to ensure that email addresses of guests who did not want to participate in the Rapid Review program were not provided to TripAdvisor (or where the email address associated with the guest was that of an agent who had made the booking on the guests’ behalf); and
  • the use of the masking practices was also to enable Meriton to contact guests who may have had a bad experience with Meriton, for the purposes of customer service.

Meriton further admitted that it became aware that some staff were using the masking practices to reduce the prospect or number of negative reviews appearing on TripAdvisor, and took steps to put a stop to that conduct.

Meriton requested the Court note its commitment to not repeat the conduct in future.

The decision

The Court found that Meriton, at the direction of management, employed a strategy to artificially boost its rating on TripAdvisor by implementing measures to reduce the number of negative online reviews guests posted on the platform.

In its findings, the Court said that the evidence presented supported the view that the practice was engaged in “deliberately and systematically by Meriton”, was widespread across the organisation, and (from January 2015) was included in Meriton’s standard checkout procedures for guests.

ACCC Commissioner, Sarah Court, said “In reducing the chances of a customer posting a negative review, Meriton created a created a more positive or favourable impression of the quality or amenity of the Meriton properties on the TripAdvisor website.

“Many consumers base their purchasing decisions on reviews they get through sites like TripAdvisor. It’s therefore vital the reviews on these review sites are not manipulated and accurately reflect all customers’ opinions – the good and the bad,” Ms Court said.

The maximum penalty for each breach is $1.1 million.  A hearing to determine penalties will take place at a later date.

The lessons

Monitoring practices associated with online reviews is an ongoing compliance focus for the ACCC.  Manipulating reviews (including by taking steps to mitigate the risk of negative reviews) is likely to be misleading.

If you have any questions in relation to your business’ practices regarding online reviews, please don’t hesitate to contact us.

Paralegal

Naomi is a paralegal in the Competition Law & Regulatory Compliance team, focusing on marketing activations, advertising review and trade promotions compliance.  She joined KHQ after having spent... Read More