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ACCC Set To Investigate Fake CE, HI FI & IT Reviews

By David Richards | Monday | 22/04/2013

IT vendors and distributors of Hi Fi and consumer electronic goods are set to be targeted by the Australian Competition and Consumer Commission who are set to probe "fake reviews" and unfair terms on group buying sites.

IT vendors and distributors of Hi Fi and consumer electronic goods are set to be targeted by the Australian Competition and Consumer Commission who are set to probe "fake reviews" and unfair terms on group buying sites.

Rod Sims, the director of the Australian Competition and Consumer Commission, is concerned that consumers may be misled by fake reviews and misleading behaviour by some online sites that also deliver goods with unfair contract terms.

During the past 12 months SmartHouse has witnessed an explosion in fake reviews appearing on websites, especially by organisations who claim to be posting reviews done by purchasers of goods. On one occasion an Australian owner talked glowingly about a product that had been launched overseas but had not been launched in Australia due to power problems.  

Sims told Fairfax Media ''Our concern is that people trust online websites more than they do company advertising or more than they do reading the newspaper. And yet if those things are not reliable then that is both unfair to the consumer and it is unfair to competitors.''

The ACCC will next year investigate companies suspected of writing their own reviews or paying for positive reviews, Mr Sims confirmed in an interview this week.

Set to be targeted are group buying sites such as Groupon, Cudo, Spreets and LivingSocial, along with online retailers who have comment pages built into their sites.

Recent investigations reveal that some manufacturers and distributors of cheap made in China products are using students to write "fake" reviews which then appear on web sites where the products are being sold. 

Also set to be investigated are organisations selling Coupons.

''People are buying a voucher and the circumstances are such that they cannot actually redeem it and therefore they just lose their money,'' Mr Sims said.

''And that is unfair on the small-business person who either breaks his or her back to try and meet them or just suffers the reputational damage.''

The owner of a Sydney driving school told Fairfax Media his business was damaged by a group buying deal.

He made no profit and had to put his own customers aside while fulfilling vouchers.

''It is not worth it [because] I made no profit at all and the price they advertise my business is too cheap for me,'' the owner said.

''I cannot afford it [and] they take too much [commission].''

LivingSocial sold vouchers for Elite Driver Education for $49 and took a 40 per cent cut, leaving the owner with $29.40 for two lessons that normally cost $60 each. About 200 vouchers were sold and just over half were redeemed.

''People who bought the voucher did not ring until the end of the deal. They were calling too late and I was booked out,'' he said.

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