New Zealand Law Society - Rental company convicted and fined for misleading online reviews

Rental company convicted and fined for misleading online reviews

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Holiday rental management and accommodation company Bachcare has been fined $117,000 for misleading consumers by altering and withholding publication of online reviews posted by users of its accommodation services. 

Following a Commerce Commission investigation, Bachcare pleaded guilty to two charges under the Fair Trading Act 1986, in what is the first litigation action the Commission has issued over online reviews. 

Between 1 June 2017 and 28 September 2018 Bachcare edited customer reviews which were published on its website, removing negative comments about the rental properties listed by the company, and/or Bachcare’s maintenance and management of properties. 

The Commission says Bachcare misled consumers through the creation of artificially positive impressions about certain properties. Bachcare’s conduct included deleting comments regarding the cleanliness and amenities of properties, and regarding reviewers’ experience of properties. It also withheld from publication reviews for properties to which customers had given a star rating of lower than 3.5 out of 5.

“Online reviews are an important source of information for consumers contemplating the purchase of goods and services,” says Commerce Commission Chair Anna Rawlings.

“This is particularly so in markets such as short-term property rentals, where customers may not have access to other information to help them to decide whether a property is suitable for their needs. Consumers have a right to expect that reviews solicited from past customers will be published in a way that accurately represents the feedback received.

“In this case, consumers had no way of knowing that star ratings were inflated, or that the text of some reviews had been edited to cast the property in a more positive light. This type of conduct undermines the trust that consumers will place in reviews of products or services.” 

In his written sentencing judgment, Judge Singh noted [at 75]: “Whilst the harm cannot be quantified, the offending conduct infringed the purposes of the Fair Trading Act. It compromised the interests of the consumers, fair competition and an environment in which consumers and businesses participate confidently.”

The Commerce Commission says online retail continues to be a priority area for it this year. 

Bachcare currently manages around 2000 properties around the country, with more than 150,000 customers per year.