A campaign against “consumer catfishing” has been announced by the Government as it unveiled plans to make it illegal to pay for bogus online reviews.
It will become an offence to pay someone to write or host a fake review under plans which could allow the Competition and Markets Authority to impose fines of up to 10 per cent of a company’s annual sales as a fine.
The regulator estimates suspicious reviews influence £23 billion of purchases in Britain per year.
US tech giants Amazon and Google are already facing a competition investigation over their failure to tackle false product reviews, which are often written to make goods seem more popular than they really are.
Businesses have always been able to sue for defamation over a bad review. In 2015, Amazon sued sellers of fake product reviews, saying they damaged its brand reputation.
More recently, the website has deleted rogue reviews following various investigations from authorities, consumer groups and the media.
Cleaning up the online marketplace
Paul Scully, the Consumer Minister, said big online retailers have a bigger role to play in cleaning up their marketplaces.
“We have to have a drive that these online companies are showing they’re responsible for consumers as well. So if there is more work for them to do, there is more work for them to do,” he said.
The rules will focus on the “black and white” issue of bought and sold fake reviews, he added. Other attempts to manipulate the reviews market, such as by asking for unfavourable ones to be deleted, will not be tackled.
Mr Scully promised the regulator would get the necessary funding to take on these powers, saying: “We’ll make sure that they’re adequately resourced in the spending review that’s coming up.”
Other proposed measures include tougher regulations for savings clubs in a bid to stop a repeat of the Farepak collapse, which left as many as 150,000 savers out of pocket when it went under in 2006.
Ministers also want the regulator to block a wider range of mergers or acquisitions it judges as harmful. This would include attempts by business giants to buy up smaller rivals and snuff out cheaper or better items.
Mandatory arbitration for large one-off purchases
The regulator would make strategic decisions over which companies and sectors might need protection, he said.
Mandatory arbitration where consumers are unhappy after a large one-off purchase, such as building work or a used car, is also proposed. Ministers hope this will mean less need for legal action and pressure on the courts.
There will also be rules against trapping customers into long or opaque subscription deals. “We want to make sure that consumers aren’t going to get ripped off,” Mr Scully said.
Kwasi Kwarteng, the Business Secretary, said: “The UK’s economic recovery relies on the strength of our open markets and consumers’ faith in them.
“By delivering on our commitment to bolster our competition regime, we’re giving businesses confidence that they’re competing on fair terms, and the public confidence they’re getting a good deal.”