An inquiry has been launched into "fake" online reviews and paid endorsements over concerns that millions of consumers are being deliberately misled.
The Competition and Markets Authority (CMA) estimated in a report published today that more than half of UK adults (54%) use online reviews, while 6% use blogs or vlogs before making spending decisions.
The consumer watchdog said that while most buyers who used reviews and endorsements found that the product or service they bought matched up to their expectations, the CMA also heard about instances of potentially misleading practices.
These included fake reviews being posted, negative reviews not being published and businesses paying for endorsements without this being made clear to consumers.
Nisha Arora, CMA senior director, consumer, commented: "Millions of people look at online reviews and endorsements before making decisions, such as where to stay on holiday or which plumber to use.
"We have found that consumers who use online reviews and endorsements find them valuable, but we have also heard about some practices that may be unlawful."
The CMA has opened an investigation into a number of companies in connection with the potential non-disclosure of paid endorsements. It has also produced information for businesses, explaining what they need to do to help them comply with the law.
In response to the CMA report, the Association of Licensed Multiple Retailers (ALMR ) stressed the importance of transparency and emphasised the need for further action to be taken to protect both customers and businesses from malicious or misleading reviews.
ALMR chief executive Kate Nicholls said: "Online review websites operate on the basis of appearing to be objective, but the report has highlighted the confusion and damage that can be caused by fake, malicious or misleading reviews.
"Our members have stressed to us what an important tool these websites can be, but they have also earmarked a number of areas in which they feel current provisions are lacking. Businesses are at risk from misleading reviews and we would like to see further procedures for detecting and removing unfair or malicious reviews put in place, along with a formal resolution procedure for disputes and complaints."
Online reviews site TripAdvisor also welcomed the CMA report.
"We agree with the CMA's recommendation that all review sites should have appropriate fraud detection measures in place," the company said in a statement.
"We are pleased that the CMA has recognised that online reviews are a hugely valuable, reliable and useful resource, but that bad practices in the wider industry need to be tackled to ensure that consumers are able to get the most accurate information possible."
In a survey of 804 hospitality operators undertaken by the British Hospitality Association (BHA), more than half (55%) said that a single review had caused their business harm, while around 75% found user reviews to be useful in promoting what they do.
Jackie Grech, legal and policy director for the BHA, said: "We are pleased that the CMA has listened to the recommendations from our industry in their report and their recommendations going forward. We share a goal of ensuring our customers receive accurate, transparent and useful information about our businesses. We will continue to work closely with the online review platforms and government to promote practices that encourage reliable reviews and transparency in business rankings, ratings and search result order."
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