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ACCC cracks down on fake reviews, sues Electrodry

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Esther Han

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CONSUMER AFFAIRS

Electrodry is accused of posting fake reviews online.

Electrodry is accused of posting fake reviews online.

“Amazing job”, “fantastic result”, “these guys are the best cleaners!” These are snippets of the online reviews the consumer watchdog has used to sue a carpet cleaning company in the Federal Court.

The Australian Competition and Consumer Commission launched legal action against A Whistle and Co, which trades as Electrodry Carpet Cleaning, for misleading and deceiving customers with fake reviews and testimonials online.

The consumer watchdog scrunitised hundreds of online reviews as part of the case.

The consumer watchdog scrunitised hundreds of online reviews as part of the case. Photo: Screenshot

Electrodry, with more than 100 franchises around the country, is accused of inducing, or attempting to induce, franchisees to post fake reviews in breach of Australian Consumer Law, court documents show.

In early 2012, Electrodry acquired the services of a Hong Kong contractor in the Philippines to look after marketing and call centre duties. In March, it allegedly asked the contractor to post fake online reviews and distribute manuals to franchisees on how to take part.

Electrodry provided sample reviews as templates to franchisees and specified they use Google, Yelp, Word of Mouth Online (Womo) and True Local. The franchisor urged them to post glowing reviews using their mobile phones so that it would be linked to different IP addresses, the ACCC claims.

To maximise participation among its 64 franchisees, Electrodry launched “operator of the month” and “operator of the year” competitions with prize money, some worth more than $1000, to reward those who posted the highest number, court documents show.

Electrodry, which provides carpet, drapery, grout, upholstery and mattress cleaning services, said those who did not take part in the “challenge” were “doing themselves a disservice”.

ACCC Deputy Chair Michael Schaper said: “Fake online reviews mislead consumers and hurt Australian businesses.  Businesses that pay for or post fake reviews can gain an unfair advantage or damage their rivals."

It released online review guidelines in December, saying businesses should be transparent about commercial relationships, not post misleading reviews, and know omitting negative reviews was akin to posting fake ones.

Fiona Adler, the founder of Word of Mouth Online (Womo), said the website contained 400,000 reviews for 160,000 businesses in Australia. More than 800 reviews had been investigated in the past six months, because there were indications they were fake.

“We allow users to flag reviews that look suspicious or dodgy, we also have automated systems to filter reviews and have an investigations team,” she said. "The number of fake reviews are increasing as businesses realise how powerful they are."

Fi Bendall, a digital management consultant who has worked with franchisees, was shocked by the methodical nature of Electrodry's attempt to lure more customers.

“It’s shocking in this day and age, with all the warnings and education, to have that system set up. They’ve been very poorly advised,” she said.

The practice was “unethical” because the writers were pretending to be customers, when they were not, she said. “It’s misleading, it’s deception. It’s definitely an attractive way to do things for some, because it’s link-building, it’s more influential than advertising."

More than 70 per cent of social media users read online reviews before making a purchase, according to a 2013 Sensis Social Media Report.

In December, Yelp admitted a quarter of reviews submitted were deemed fake and not published.

The ACCC is seeking declarations, penalties, injunctions and corrective notices.

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