Advertising your small business online is definitely the way to go these days, with potential to reach a large audience with a much smaller outlay than traditional media. With this in mind we thought we’d highlight a recent move by the Australian Competition and Consumer Commission (“ACCC”) as a word of warning to business owners.
The ACCC has just commenced legal proceedings in the Federal Court against the franchisor of Electrodry Carpet Cleaning, alleging that the company promoted the posting of fake online testimonials.
Electrodry is one of Australia’s largest carpet cleaning franchises, with over 100 franchisees across Australia, specializing in residential carpet cleaning, drapery, grout and upholstery cleaning.
The ACCC claims that the franchisor:
- Urged its franchisees to post fake positive reviews to websites including, Google, Yelp, WOMO and True Local;
- Provided to its franchisees sample review templates;
- Advised its franchisees to use mobile phones to post reviews in order to have differing IP addresses; and
- Offered financial incentives as prizes to franchisees who posted the highest number of reviews.
Based on this the ACCC is arguing that the actions of the franchisor amount to false and misleading representations and that franchisees were inducted to make these representations by the franchisor.
The value of an online review to a business is huge and many businesses go to great lengths with their customers to gain such reviews, however care must be taken about how these reviews are obtained and that they are true and actual reviews.