January 5, 2015
The Italian government’s competition law regulatory agency, the Italian Competition Authority (ICA), recently fined the online travel service, TripAdvisor, 500,000 euros (approximately $600,000). The fine was based on allegedly fake consumer reviews published by individuals through the TripAdvisor service. This action highlights the challenges associated with oversight of online consumer reviews and comments, an increasingly important commercial issue in the United States and around the world.
The ICA imposed the fine against TripAdvisor based on the ICA claim that TripAdvisor’s system makes it impossible for consumers to determine which of the posted consumer reviews are legitimate and which are fake. The ICA ruling also criticized TripAdvisor for not providing adequate content oversight to identify and remove fake reviews.
According to the ICA, these failures by TripAdvisor violate Italian consumer protection law. Under Italian law, it is illegal for a business to mislead consumers as they make their commercial decisions. The ICA contends that TripAdvisor is misleading consumers by providing reviews that can not be verified by consumers.
TripAdvisor reportedly contends that the ICA action is unjustifiably excessive. TripAdvisor notes that it actively attempts to monitor the accuracy and validity of consumer reviews, and that it takes reasonable remedial actions when it finds problems. The company also argues that consumers evaluate the accuracy and quality of online reviews based on their own direct experience. It TripAdvisor reviews become unreasonably inaccurate, consumers will cease using the service as it will no longer provide valuable information.
Of particular interest in this action is the fact that the ICA is apparently applying a “zero tolerance” approach to its oversight of content integrity. Reportedly, the ICA is prepared to impose fines even if the actual number of bogus reviews is extremely small when compared with the total number of available reviews.
It appears that a growing number of businesses in different countries are objecting to the increasing number of negative consumer reviews that are either entirely bogus or are unreasonable by objective standards. This concern on the part of businesses seems to be driven, in large measure, by the fact that online consumer reviews appear to have an increasingly substantial impact on customer behavior.
Negative online reviews, whether accurate, bogus or unreasonably harsh now seem to have direct and significant impact on business profitability. Businesses and regulatory authorities both recognize this situation and are taking increasingly extensive action to police the integrity of customer reviews.
Although it is entirely appropriate for the ICA to take action to curb fake consumer reviews online, its ruling in the TripAdvisor case seems to be unreasonably harsh. A policy of zero tolerance for bogus online consumer reviews is not realistic or commercially appropriate. It does not seem possible that any oversight system, no matter how carefully structured and actively implemented, can ever prevent all fake reviews, and it seems certain that there is no way to block all unreasonable negative reviews.
The law can and should energetically examine and address the challenge of bogus and unreasonable consumer reviews. However, actions taken by authorities to encourage and require businesses to engage in more effective oversight over the integrity of consumer reviews must be reasonable and consistent with the realities of the consumer marketplace.