By Professor Paula Giliker, University of Bristol Law School
UK consumers await the enactment of the Digital Markets, Competition and Consumer Bill (DMCC Bill), currently going through Parliament. It is due to come into force in mid-2024. Part 4 deals with Consumer Rights and Disputes, with Chapter 1 dealing with protection from unfair trading. This chapter will revoke the Consumer Protection from Unfair Trading Regulations 2008 (S.I. 2008/1277) which implemented the Unfair Commercial Practices Directive 2005/29/EC. Unfair commercial practices will now be dealt with under the new Act.
The UK Government Press Release of 25 April 2023 proudly announced that its new Bill would:
“ … crack down on rip-offs, protect consumer cash online and boost competition in digital markets. New powers unveiled [are] aimed at boosting competition, clamping down on subscription traps and fake reviews.”
The regulation of fake reviews was immediately picked up by the press; the BBC news website announcing: “New rules ban subscription traps and fake reviews.” The Times was more specific: “Paying for fake online reviews will be a crime”.
Such measures are, indeed, timely. Online consumers face the obvious problem of information asymmetry. Reviews give consumers an opportunity to overcome this information deficit by enabling them to draw on feedback from other consumers. On a very basic level, businesses with 5 star reviews are going to be more attractive to online consumers. And yet a 2023 Department of Business and Trade report found that:
- 11% to 15% of all reviews on e-commerce platforms for three common product categories (consumer electronics, home and kitchen, sports and outdoors) are likely fake
- well-written fake reviews distort consumer decision making – consumers were 3.1% more likely to purchase a product with well-written fake reviews
- fake reviews had a greater impact on consumer behaviour for consumer electronics and higher-priced products, and in particular consumers were 9.2% more likely to purchase a product with well-written fake reviews if the product price was greater than £80
- fake review text on products alone causes an estimated £50 million to £312 million in total yearly harm to UK consumers.
Fake reviews therefore distort the market, harm consumers and place honest businesses at a disadvantage against competitors prepared to mislead consumers to gain an enhanced market share. The DBT report above shows that they are prevalent, and advances in natural language processing (NLP) and the availability of chatbots make it easier than ever to produce well—written fake reviews in large quantities.
Yet identifying and taking down fake reviews is not a straightforward process. Thanks to AI, fake reviews are becoming better-written and hence more difficult to detect. Equally, businesses rely on reviews to boost online sales and over-zealous removal of reviews will harm trade. Regulation needs to be proportionate: acting against fake reviews while allowing businesses to incentivise legitimate customers to review their products. An added twist is that the EU has already brought in measures to address fake online reviews in a 2019 Directive, which modified the provisions of the 2005 Unfair Commercial Practices Directive (Omnibus or Modernisation Directive 2019/2161/EU, Article 3.). As we will see, the EU measures are already in place (Member States were required to bring them into force by May 2022).
Fake Reviews and the DMCC Bill: Big Headlines, Slower Steps
Given the headlines above, you would be entitled to search the DMCC Bill for the section on fake reviews. You would look in vain. Rather than putting fake reviews in the Bill, clause 240 empowers the Secretary of State to add new commercial practices to Schedule 19 (the list of commercial practices which are in all circumstances considered unfair). The UK Government has declared its intention to introduce, therefore, secondary legislation regulating fake online reviews under this provision. Consultation is ongoing, alongside the passing of the Bill. The Government’s December 2023 Policy Summary Paper, (See also the earlier Government response to its 2021 Consultation Paper: Reforming competition and consumer policy: government response). Enhancing Consumer Rights, argues that this is necessary. It is an “emerging harm” and so a more cautious approach is needed. More bluntly, the measures have yet to be finalised. It is also suggested that there may need to be a one year implementation period to enable traders to amend their practices. Consultation is currently taking place on treating the following practices as, in all circumstances, unfair:
- submitting a fake review, or commissioning or incentivising any person to write and/or submit a fake review of products or traders
- offering or advertising to submit, commission or facilitate a fake review
- misrepresenting reviews, or publishing or providing access to reviews of products and/or traders without:
- taking reasonable and proportionate steps to remove and prevent consumers from encountering fake reviews
- taking reasonable and proportionate steps to prevent any other information presented on the platform that is determined or influenced by reviews from being false or in any way capable of misleading consumers. (Policy briefing, .)
Whether all these measures make it to the finish line remains to be seen. It is far more likely that a more selective list will be provided. The Government has also emphasised that the measures dealing with Misleading Information/Misleading Omissions/Contravention of requirements of Professional Diligence, previously found under the 2008 Regulations and now in the Bill, will continue to deal with fake online reviews. These are premised, however, in contrast to Schedule 19, on proof that the practice would have been likely to cause the average consumer to take a transactional decision that he or she would not have taken otherwise (clause 223). This is not always easy to show.
A few comments.
It is worth noting that the Government states openly that it “will continue to work with businesses and consumer groups to ensure new regulations on fake reviews are clear and proportionate” and impose “a new minimum standard” (Policy briefing, , .). Its approach is market led and places particular emphasis on the need for online businesses to be able to incentivise consumers to produce reviews and that regulation should not overburden small businesses. The 2023 Impact Assessment (29) argues that smaller businesses, in view of their limited resources and in-house capability to implement advanced review screening systems, should only be expected to take very simple steps to ensure reviews are genuine. The obligation would be to moderate reviews in a manner proportionate to the trader’s available resources and the level of risk of review manipulation (36, 63). The risk, size and capabilities of the review hosting businesses will be relevant factors. Secondly, the Government places considerable faith in moderation of fake reviews being undertaken through automated systems that use algorithms and machine learning techniques on user and review data which can flag potentially misleading content, although it acknowledges that human moderators will need to review flagged content and make the final decision on ‘edge’ cases. It takes the view that larger traders already have such systems in place and can absorb any further regulatory duties provided they are proportionate. Caution therefore seems a key word.
And in the EU ….
We can contrast UK hesitancy with EU measures under the 2019 Omnibus Directive. These provide for new unfair commercial practices which are in all circumstances unfair:
- 23b: Stating that reviews of a product are submitted by consumers who have actually used or purchased the product without taking reasonable and proportionate steps to check that they originate from such consumers,
- 23c: Submitting or commissioning another legal or natural person to submit false consumer reviews or endorsements, or misrepresenting consumer reviews or social endorsements, in order to promote product (2019 Directive, Art 3(7)(b)).
The Directive also adds that where a trader provides access to consumer reviews of products, it would be a misleading omission if the trader does not provide information about whether* and how the trader ensures that the published reviews originate from consumers who have actually used or purchased the product (2019 Directive, Art 3(4)(c)). This can be provided by a hyperlink to a page providing the requisite information. It is also envisaged that this information will help with the enforcement of 23b above. There is no equivalent provision proposed in the UK legislation which, given this is a limited obligation, is disappointing.
There are obvious similarities between the UK and EU legislation. This might make you consider to what extent the UK is pursuing the “freedoms” obtained through Brexit. However, digging deeper, we see differences. The term “reasonable and proportionate steps” to verify reviews is clearly open to divergent interpretations. The Guidance provided by the Commission acknowledges that it must take account of the trader’s business model, scale of activity and the level of risk and that large platforms will need to do more. Yet it also proposes verification steps such as requiring booking references, registration and installing verification measures. Will the EU’s goal of enhancing transparency and ensuring consumers are fully informed when making online purchases be more demanding than that envisaged by the UK government? The tone of language used certainly indicates this. Equally the term “review” is taken broadly at EU level to include practices related to ratings – will this be so with the UK legislation? While the measures for consultation are currently very broad, it is not clear to what extent the final version will cover all the practices covered in 23b and 23c.
The EU measures were further included in the main body of the 2019 reforms. They are now in force across the EU. In contrast, the DMCC Bill will be enacted without the provisions for fake online reviews. At the start of 2024, therefore, we are still unsure what measures will ultimately be put in place and when they will be in force.
While such delays are frustrating, we might think further about the difficulties of regulating fake online reviews. As I have indicated above, detection is not as straightforward an exercise as might be envisaged. We are putting a lot of faith in AI. And what do we mean by a “fake” review? If I am incentivised to review a product, is that “fake”? One definition might be a review that is not the genuine experience of the consumer, but how do we identify this with any degree of accuracy? Or do we mean non-genuine reviews designed to mislead the consumer (but then how do we show intent?) Further, even genuine reviews can be misleading if actuated by bias or prejudice – the holiday industry, for example, publishes every year “amusing” reviews by holiday-makers in Spain and Greece that give one star reviews because it is too hot or the beach too sandy. We may laugh at the subconscious bias of such reviews but if the reviewer gives a one star rating and no-one actually clicks to read the review, then the harm is done …
Research by the consumer body Which? has identified that fake reviews make consumers more than twice as likely to choose poor-quality products. In 2022, UK consumers spent £224 billion in online retail markets. Online fake reviews present, therefore, a real threat to consumer choice. While the UK lags behind the EU, it is hoped that the Government will pursue its regulation of fake online reviews, even if it is not included in the DMCC Bill itself. In so doing, however, it is necessary to appreciate the difficulties of the regulatory exercise. Setting minimal standards, easily satisfied by traders, will not solve the problem.
*It is therefore not mandatory to have a system in place but if this is the case, the trader must disclose this.
Paula Giliker originally delivered this essay as a paper on “Fake Online Reviews and Endorsements” at the University of Reading workshop on The Digital Markets, Competition and Consumer Bill in December 2023.