Consumer watchdog targets website product reviews and discounts

FAKE reviews and group buying sites offering discounts are top of the competition watchdog's hit-list as it moves to police misleading online behaviour.

With more people using review sites for product advice, the Australian Competition and Consumer Commission is concerned they may be misled by reviews, chairman Rod Sims told Fairfax Media.

''Our concern is that people trust online websites more than they do company advertising, or more than they do reading the newspaper. And yet if those things are not reliable … then that is both unfair to the consumer … and … to competitors.''

The ACCC will next year investigate companies suspected of writing their own reviews or paying for positive reviews, Mr Sims confirmed in a wide-ranging interview.

''We have looked at some of this and some websites are saying these are authentic consumer experiences, and we have got some concerns that they are not. We are looking at it.''

Meanwhile, the ACCC and state consumer groups are receiving up to 140 complaints each month about group buying sites such as Groupon, Cudo, Spreets and Living Social, making it an area of urgent concern. The sites offer discount vouchers on goods and services - provided enough people sign up for the deal.

''People are buying a voucher and the circumstances are such that they cannot actually redeem it, and therefore they just lose their money. Many do get a discount, but some just lose their money,'' Mr Sims said. ''That is unfair on the small- business person who either breaks his or her back to try and meet them, or just suffers the reputational damage. And it is unfair to consumers.''

The owner of a Sydney driving school told the Herald his business was damaged by a group deal. He made no profit and had to put his own customers aside while fulfilling vouchers.

''It is not worth it [because] I made no profit at all and the price they advertise my business is too cheap for me. I cannot afford it [and] they take too much [commission].''

Living Social sold vouchers for Elite Driver Education for $49 and took a 40 per cent cut, leaving $29.40 for two lessons that normally cost $60 each.

The owner agreed to the vouchers because a Living Social sales representative called him repeatedly for months until he finally agreed to a contract involving 200-300 vouchers. ''People who bought the voucher did not ring until the end of the deal. They were calling too late and I was booked out,'' he said.

A spokeswoman for Living Social said it was up to businesses to capitalise on the vouchers as a ''customer acquisition tool''.

''Living Social welcomes open dialogue with the ACCC. Living Social has a best-in-class refund policy and offer a five-day change-of-mind refund option,'' she said.

In September Fairfax Media revealed that online reviews are regularly bought from temporary job forums such as

In November 2011 moving company Citymove was fined $6600 for fake reviews on the Moving Review website. Such reviews are considered to be misleading and can attract penalties up to $1.1 million for companies and up to $220,000 for individuals.

This story Consumer watchdog targets website product reviews and discounts first appeared on The Sydney Morning Herald.