The CMA has found that online reviews and endorsements are proving useful to consumers, but it has concerns that some practices may be unlawful.
The Competition and Markets Authority (CMA) opened a call for information on online reviews and endorsements in February this year. In a report published today it estimates that more than half of UK adults (54%) use online reviews, and that 6% use blogs or vlogs before making purchases.
Most buyers who used reviews and endorsements found that the product or service they bought matched up to their expectations.
However, the CMA has also heard about instances of potentially misleading practices:
- fake reviews being posted onto review sites
- negative reviews not being published
- businesses paying for endorsements in blogs and other online articles without this being made clear to consumers
In response, the CMA has opened an investigation using its consumer enforcement powers into a number of companies in connection with the potential non-disclosure of paid endorsements. Other concerns that have been raised with the CMA are being assessed to determine whether enforcement action is warranted.
In addition to UK-based action, the CMA, as part of its plans for assuming the presidency of the International Consumer Protection and Enforcement Network (ICPEN) on 1 July 2015, is proposing a project on online reviews and endorsements.
Nisha Arora, CMA Senior Director, Consumer, said:
Millions of people look at online reviews and endorsements before making decisions such as where to stay on holiday, or which plumber to use.
We have found that consumers who use online reviews and endorsements find them valuable, but we have also heard about some practices that may be unlawful.
We are committed to ensuring that consumers’ trust in these important information tools is maintained, and will take enforcement action where necessary to tackle unlawful practices. We have opened an investigation into businesses that may be paying for endorsements in blogs and other online articles where the payment may not have been made clear to readers. We have also published information for businesses to tell them what they need to do to help them stay within the law.
Notes for editors
- The CMA is not naming the parties directly involved in its investigation at this early stage of the case.
- The CMA has produced an infographic (PDF, 54.6KB, 1 page) on consumer spending after reading online reviews.
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading, as amended by the Enterprise and Regulatory Reform Act 2013.
- The Consumer Protection from Unfair Trading Regulations 2008 contain a general prohibition on unfair commercial practices, in particular misleading and aggressive practices. They also contain 31 banned practices which are prohibited in all circumstances. It is a banned practice to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer. It is also a banned practice to falsely claim or create the impression that a trader is not acting for purposes relating to his trade, business or profession, or to falsely represent oneself as a consumer.
- ICPEN is an organisation comprised of consumer protection authorities from over 50 countries, whose aim is to: protect consumers’ economic interests around the world, share information about cross-border commercial activities that may affect consumer welfare, and encourage global cooperation among law enforcement agencies. On 1 July 2015, the CMA will take up the presidency of ICPEN for a year.
- For more information the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn.
- Enquiries should be directed to Siobhan Allen (email@example.com, 020 3738 6460) or Simon Belgard (firstname.lastname@example.org, 020 3738 6472).