Business marketplace startup Service Seeking has been ordered by the Federal Court to pay $600,000 in penalties for making “false or misleading representations regarding reviews” of businesses on its platform.
The business admitted to presenting reviews as if they were provided by happy customers, when they had, in fact, been written by the businesses themselves.
Founded in 2007, Service Seeking is an online marketplace platform, allowing customers to seek quotes from different businesses for jobs such as building, cleaning or gardening services.
Through the platform’s ‘Fast Feedback’ feature, businesses were able to draft their own reviews and give themselves a star rating for a job they had completed. That review was then sent to the customer for confirmation. But, if the customer did not respond within three days, the review was automatically published anyway, regardless of its accuracy.
This feature was used to create about 21,000 reviews between July 12, 2016, and November 29, 2018. According to the Australian Competition and Consumer Commission (ACCC), some 17,000 of those reviews were published automatically, without any input from the customer themselves.
Service Seeking admitted liability for the misleading reviews, and made joint submissions to the Federal Court with the ACCC.
“The case related to a small proportion of reviews published between 2016 and 2018 after which the Fast Feedback feature was removed from the site,” a Service Seeking spokesperson told SmartCompany.
In his judgement, Justice Jackson said the startup had engaged in “a systematic course of conduct for the self-interested purpose of increasing the attractiveness of its website to businesses and customers in a manner which it must have known would give rise to numerous instances of misleading conduct”.
He noted that a number of active customers had posted seeking quotes for more than one job, suggesting this showed they trusted the site, and the reviews on it.
“This was an abuse of the trust that customers can be inferred to have placed in the site,” he said.
ACCC deputy chair Delia Rickard suggested customers are increasingly reliant on online reviews in order to make informed purchasing decisions.
“Deceiving them about the authenticity of the reviews in my view is showing contempt for consumers,” she said.
“Online reviews need to accurately reflect the independent views and feedback of genuine customers, or the business publishing them risks breaching the Australian Consumer Law,” she added.
The ACCC initiated proceedings against Service Seeking in December 2018. At that time, the startup had more than 1.5 million customer accounts, and about 170,000 businesses registered on the platform.
As well as issuing the penalty, the court made orders for injunctions, corrective notices, and the implementation of a compliance program.
NOW READ: As the ACCC drags Google to court, should Aussie startups be taking notes?
COMMENTS
SmartCompany is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while it is being reviewed, but we’re working as fast as we can to keep the conversation rolling.
The SmartCompany comment section is members-only content. Please subscribe to leave a comment.
The SmartCompany comment section is members-only content. Please login to leave a comment.