In the 15 years since it was founded, it is hard to think of a business which has had a more profound effect on consumer habits in the hospitality sector than TripAdvisor. However, a recent Competition and Markets Authority report questioned the reliability of review sites and their rankings. Ben Chivers of corporate law firm Travers Smith looks at where the law stands in preventing fake reviews from influencing consumer decisions?

According to a recent report by the Competition and Markets Authority, over 50% of adults in the UK read online reviews before deciding whether or not to purchase goods or services online and an estimated £23 billion a year of consumer spending in the UK alone is influenced by such reviews.

Despite the popularity of online review sites, it can be all too easy for rankings to be manipulated. In its investigation into TripAdvisor, the Daily Telegraph uploaded onto the site details of a fictitious nine-bedroom guesthouse called the ”111 Hotel” using a picture of their office canteen. After writing a number of gushing reviews and awarding it five-star ratings, the 111 Hotel was rated in London’s top 70 guesthouses (out of over 300 at the time).

The CMA report questions the reliability of review sites and their rankings. It identifies a number of business practices which cause concern, most notably the practice of writing or commissioning fake reviews in order to boost ratings or undermine rival businesses. Such fake reviews mislead consumers and affect trade, particularly for smaller businesses where one negative review can be detrimental.

So where does the law stand in preventing these fake reviews from influencing consumer decisions?

In the CMA’s view, the current law is not proving effective enough at stopping businesses and individuals from posting fake reviews online. Both the Consumer Protection from Unfair Trading Regulations 2008 and the CAP Code (the rule book for non-broadcast advertisements, sales promotions and direct marketing communications) contain provisions prohibiting fake online reviews. These rules are enforced by the CMA, the Advertising Standards Authority and Trading Standards. Whilst these bodies have had some success in dealing with the issue - in 2012, for instance, the ASA ordered TripAdvisor to drop their slogan “reviews you can trust” following complaints from thousands of hoteliers – the problems still persist, exacerbated by the sheer proliferation of online review sites and volume of content available which means that, even though the rules exist, the chance of being caught is slim.

If regulation doesn’t provide the answer, then it is possible for a business that has been the victim of a fake review to take things into its own hands and sue the author for defamation. However, with the legal fees involved, the difficulty in tracing an anonymous reviewer and the likelihood of the reviewer being an individual that is not worth suing, businesses will rarely bring cases to court. That said, there are a few real-life examples and judges appear sympathetic to businesses that have suffered financially.

One recent example is the case brought by American lawyer, Timothy Bussey, after an anonymous individual posted a review on Google describing Mr Bussey as a “scumbag” who “loses 80% of his cases”. Through his lawyers, Mr Bussey was able to subpoena Google’s records and discovered that a British man, Jason Page, was responsible. The case was taken to the High Court earlier this year. Mr Bussey had to prove that he had suffered “serious financial loss”. The judge held that, taking into account the “grapevine effect of the internet”, the review had caused serious damage and ordered Mr Page to pay £100,000 in damages and costs.

The case received a lot of press coverage and was important in demonstrating that those who publish fake online reviews can be held accountable for their actions. If the regulation in this area and its enforcement continues to be a blunt weapon, it may be that we see more of these cases despite the barriers to entry.

But what about the review websites themselves? What are they doing to prevent fake reviews from being published and are they doing enough?

Many review sites, including TripAdvisor, prohibit fake reviews in their terms of use but in reality this is unlikely to put off a determined faker. They also claim to invest in complex fraud detection systems assessing the frequency of posts and the likelihood of them being false. Following the release of the CMA report, TripAdvisor issued the following statement, ”Trip Advisor has been developing and refining its fraud detection process for more than 15 years. We fight fraud aggressively and our systems and processes are extremely effective in protecting consumers from the small minority of people who try to cheat our system.

There is an argument that review sites which are profiting from providing space for online reviewers to post anonymously should take responsibility and be liable for content that is defamatory. However, in almost all cases, the review site’s terms of use will exclude any liability for defamatory content, leaving the defamed business with no claim against it.

In a world where the internet is now at the heart of everyday consumer decisions, it is clear that action needs to be taken to protect businesses. The CMA report is a significant step in highlighting the issues that businesses face but many (including the Association of Licensed Multiple Retailers) still feel that the law has a long way to go to catch up with the change in consumer behaviour.