During the COVID-19 pandemic we have seen an explosive growth of online purchases. Online reviews can be helpful in making a purchase. However (the trade in) fake reviews (has/) have been on the rise for years and it becomes more difficult to differentiate between fake and genuine.
In November 2019 the European Parliament and the Council of the European Union adopted Directive 2019/2161 regarding the better enforcement and modernization of Union consumer protection rules (“Directive Modernization Consumer Protection”).1 This directive (aims to) bring(s) consumer protection (more) in line with the digital age and to ensure a better enforcement of these rules. The directive also includes additional rules regulating fake reviews. Despite the implementation deadline of 28 May 2022, the Netherlands has been very expeditious and recently published a legislative proposal implementing the Directive Modernization Consumer Protection (the “Dutch Proposal”). The Dutch Proposal is open for (internet) consultation until 22 November 20202.
In this blog we will set out the rules regulating fake reviews in Business to Consumers relationships under Dutch law and the amendments under the Dutch Proposal relating to fake reviews.
Fake reviews: misleading and unfair?
The Dutch Civil Code (“DCC”) currently does not have a specific ban on fake reviews nor a definition thereof. However, a commercial practice is regarded as misleading if it provides information that is factually incorrect or that (is likely to) mislead(s) the average consumer for example in relation to the nature, main characteristics and/or the quality of a product (article 6:193c (1) DCC). A fake review may be said to easily meet these criteria, especially when fake reviews are purchased and published without informing the public of this, which appears to be an existing practice. In such a case, the average consumer has been withheld essential information necessary to take an informed transactional decision, which can be qualified as a so-called misleading omission (Article 6:193d (1)(2)DCC).
Furthermore, the Dutch Foundation on Advertising is a self-regulatory body of industry that has compiled a set of practical rules in the Dutch Advertising Code and specific codes such as the Social Media Code & Influencer Marketing (“SMC”). The SMC contains a ban on manipulation of social media communications. This includes a prohibition on the use of false or non-existent identities that create fake “likes” or reviews and extends to the displaying of exclusively positive reviews without indicating – if that is the case – that negative reviews have been deleted. Any natural or legal entity can submit a complaint with the Advertising Code Authority. The downside is that these decisions are not binding, but they do enjoy a high degree of authority and are commonly complied with in practice.
The Dutch Proposal: fake reviews
The Dutch Proposal may be regarded as a win for consumer protection, but might bring along some practical implications for the industry.
Misleading omission: essential information
The Dutch Proposal broadens the category of misleading omissions (Article 6:193d in conjunction with 6:193e DCC) and specifically includes that when traders provide access to consumer reviews, the consumer should be informed whether and which checks and balances are implemented in order to ensure that reviews are bona fide. Checks could include the technical means to verify the reliability of the person posting a review e.g. by requesting information to verify that the consumer has actually used or purchased the product. Additional information should also be provided which includes inter alia:
- how reviews are being filtered (e.g., exclusively displaying positive or negative reviews);
- whether a review is sponsored or in any other way influenced by a contractual relationship (e.g. by influencers promoting a product on their social media accounts).
This information is qualified as essential under the Dutch Proposal. The failure to provide such information or to provide such information in an ambiguous manner and thus, influencing the consumer to make a different transactional decision than the consumer may have taken with the information, is deemed to be a misleading omission which is qualified as an unfair commercial practice.
Blacklist: misleading commercial practices
The Dutch Proposal furthermore extends the already existing blacklist of practices that are deemed to be misleading under all circumstances (Article 6:193g DCC) to include:
- the lack of implementation of checks and balances: when stating that reviews of a product are submitted by consumers who have actually used or purchased the product, reasonable and proportionate steps should be taken to verify that they originate from such consumers;
- the submission of fake reviews: submitting or commissioning a third party to submit fake reviews or endorsements or displaying consumers reviews or social endorsements in a misleading manner in order to promote products.
With regard to the lack of implementation of checks and balances the Dutch legislator furthermore suggests that a(nother) reasonable and proportionate step is implementing a detection mechanism for suspicious patterns of submitting reviews (e.g. (i) when a (very) large number of reviews are submitted in a (very) short time; (ii) the use of identical texts in different reviews; or (iii) the systematic withdrawal of negative reviews). Steps to be taken to combat and eliminate such practices are inter alia the initiation of further investigation and the removal of such reviews. As stated above, there is an obligation to inform consumers about the implemented checks and such information qualifies as essential information. Stating that reviews of a product are submitted by consumers who actually used or purchased the product without the aforementioned checks and balances in place therefore qualifies as a misleading commercial practice (see recital 47 Directive Modernization Consumer Protection).
With regard to the prohibition on submitting or commissioning fake reviews these include ‘likes’ on social media as well as the manipulation of reviews (e.g. deleting negative reviews and exclusively displaying positive reviews). The extrapolation of social endorsements may also fall within the ambit of this blacklisted prohibition (e.g. by linking of reviews or other interactions with the consumer with different albeit related content and creating an overall positive consumer appearance towards the content in its entirety – see recital 49 Directive Modernization Consumer Protection).
The Dutch Proposal furthermore strengthens the ability of the Dutch supervisory authorities to take enforcement actions against inter alia unfair commercial practices. Noteworthy is the implementation of a maximum fine in the case of coordinated actions i.e. joint enforcement actions against a trader in the event of for example a cross-border unfair commercial practice. The Dutch Proposal includes a maximum fine of ten percent of the annual turnover of a trader in the Member State(s) concerned in the case of a blacklisted misleading practice as mentioned in article 6:193g as discussed above. Failure to comply with the aforementioned rules and to implement the necessary checks and balances may thus lead to high penalties being imposed.
Practical implications and conclusion
Overall, the Dutch legislator acknowledges that the Dutch Proposal will lead to increased compliance costs. However, the draft explanatory memorandum states that the information obligations for the industry will not lead to a substantial business impact other than adjusting the online environment when use is made of rating systems and consumer reviews.
Should the Dutch Proposal be adopted in its current form, non-compliance could lead to a substantial fine. It is therefore recommended to consider, where possible and appropriate, how to implement the necessary steps in order to comply with the information obligations that are foreseen in the Dutch Proposal as well timely implement the required checks and balances – as set out above – when using a rating and/or review system. Nevertheless, the Dutch Proposal is currently still in its initial stages and we are looking forward to see how the adoption will develop in the period to come.
- This directive amends four different existing directives of which we will focus on (the implementation of) Directive 2005/29/EC (the “Unfair Commercial Practices Directive”) in this blog.
- The internet consultation can be found here (in Dutch). The legislative proposal and the accompanying draft explanatory memorandum can also be found via aforementioned link.