Consumers are increasingly searching for, comparing and purchasing products and services online. They more and more rely on reviews and recommendations from other consumers. However, these consumer reviews are not always reliable. For example, sometimes positive reviews remain online longer than negative reviews, or consumers even receive a form of reward in exchange for a positive review. In those cases, the consumer relying on these reviews is actually misled.
The Dutch Consumer and Market Authority (the “ACM”) has previously investigated misleading online consumer reviews. At that time, the ACM concluded that it is plausible that false reviews are placed and pointed out the risk of misleading the consumer. At the time, the ACM already advocated for more transparency with respect to the working method of online consumer reviews. For example, it should be clear to the consumer if a consumer review is written on the initiative of an advertiser and is therefore actually an advertisement.
Consumers are also influenced in their purchasing decisions by the indexing of search results of online search engines. Products or services that are shown as the first search result are much more likely to be purchased. It is therefore important for consumers to know how the order of these search results is determined. It could for example be the case, that the first search results are shown first because they have been paid for by the provider of that product or service without the consumer knowing this. The legislator has now introduced new rules to counter this kind of deception.
The Implementation Act on Modernisation of Consumer Protection (hereinafter: ‘Modernisation Act’) is a transposition of European law which comes into force on 28 May 2022. It creates, among other things, transparency obligations for providers of online consumer reviews and they must take reasonable and proportionate steps to ensure the reliability of these reviews. Providers of online search engines will also be subject to transparency obligations.
The Modernisation Act also regulates a number of other interesting topics such as new rules for online marketplaces, personalized price offers and digital services or content provided in exchange for personal data. This article however only deals with the rules on online consumer reviews and online search functions.
Online consumer reviews
Online traders are obliged to take reasonable and proportionate steps to ascertain whether online reviews really come from consumers. The trader has a best-effort obligation. It is not necessary to obtain absolute certainty about the origin of the online reviews.
Examples of reasonable and proportionate steps that are mentioned in the parliamentary history are the detection of suspicious patterns (e.g. a large number of reviews in a very short time, the use of identical texts in various reviews, the systematic withdrawal of negative reviews, etc.) and steps that are taken to deal with them (such as initiating further investigation, removing reviews, approaching the merchant, etc.).
In addition, the trader must actively inform consumers about how he ensures that the published reviews come from consumers who have actually used or bought the product or service. This obligation to inform covers the reasonable and proportionate steps the trader takes to verify the origin of consumer reviews. Failure to inform consumers is a misleading commercial practice. A critical note here is that informing consumers of the measures taken could undermine the effectiveness of those measures.
The Explanatory Memorandum describes that the information provided by the trader must give the consumer clarity about how the beforementioned reasonable and proportionate steps are carried out and processed. For example, if all reviews, positive and negative are published in the same way, if the reviews are paid for, or if the reviews are otherwise influenced by a contractual relationship with a trader.
Providers of online search functions are also subject to an information obligation. The provider must provide information about the most important parameters used by the search function to determine the ranking of the search results and the relative importance of the parameters compared to each other. (Also) comparison websites are explicitly mentioned as recipients of this obligation. The information obligation does not go so far as to require disclosure of a detailed elaboration of the ranking mechanism, including the algorithms used by the search function.
Finally, information about a direct or indirect payment for a higher ranking must be provided in a concise, easily accessible and understandable form.
The information should not be hidden somewhere at the bottom of a page, but made available on a specific page accessible from the page where the search results are presented.