Retailers warned about mishandling negative reviews

Internet Retailing

20th Dec 2017

Retailers are being urged to understand their legal rights and responsibilities before responding to negative online reviews.

According to Rigby Cooke Lawyers partner Elizabeth Guerra-Stolfa, managing review systems incorrectly can land businesses in hot water, as demonstrated in the recent ACCC court case against Meriton.

The property giant was found to be ‘masking’ negative reviews, an understandable action, given the growing importance of online reviews in the world of e-commerce, but one that ultimately backfired.

“Online reviews are now a reality of conducting business in our digital age and it’s understandable that a business would want to do everything it can to mitigate the damage of a negative review,” Guerra-Stolfa said.

Instead, she suggested businesses should first attempt to engage in constructive communication with the person who posted the review, either by replying or inviting the person to contact the business to discuss the matter privately.

“If non-legal avenues fail and the review continues to have a serious detrimental impact, the business may have legal recourse under various Australian laws.”

Defamation laws differ across states, but as a general rule, defamation is defined as the publication of a false statement that harms a person’s reputation. N0t every negative review counts as defamation.

“A defamation claim needs to clearly demonstrate the publication was a communication to a third person, the communication adequately identified you or your business and the communication was false,” Guerra-Stolfa said.

Only individuals, companies with fewer than 10 employees or not-for- profit organisations can sue for defamation however, and the claim has to have commenced within one year of the defamatory statement being made. The period may be extended in limited circumstances.

If has more than 10 employees, or is otherwise excluded from bringing a defamation claim, it may be able to take action for the tort of injurious falsehood. However, there is a very high threshold to meet for these types of claims.

“For an injurious falsehood claim, it is necessary to show not only that the published statement was false but also that it was maliciously made and the business suffered damage as a result,” Guerra-Stolfa said.

Unlike defamation, businesses have six years from the date of the publication to bring court proceedings, however these claims are difficult to prove.

Another form of legal recourse is to bring a claim for misleading or deceptive conduct under the Australian Consumer Law (ACL). If the review about the business occurred in ‘trade or commerce’ and is misleading or deceptive (or likely to mislead or deceive), there may be a claim under the ACL.

“What this means is that the misleading or deceptive review must be made in the course of business and not simply by a disgruntled individual,” Guerra-Stolfa said.

“As such, this avenue is more appropriate where a competing business writes a negative review about your business.”