The ACCC has won an agreement from home builder Wisdom Properties to remove a non-disparagement clause from its standard home building agreement after the regulator said the clause likely violates the Australian Consumer Law.
Since October 2008, Wisdom’s home building agreement contained a non-disparagement clause under which it could prevent customers from making public statements, including online reviews, about its services.
“Consumers are increasingly relying on online reviews when making purchase decisions and businesses must not prevent consumers from seeing genuine, relevant and lawful reviews by their customers through standardised contract terms,” ACCC Commissioner Sarah Court said.
“Any standard form contract terms that prevent or limit a customer from making public comments about goods or services are likely to be unfair under the Australian Consumer Law.”
The agreement also allowed Wisdom to stop working on a construction project and hold customers liable for losses resulting from public statements.
Wisdom, which admitted the clause was unfair, included the non-disparagement terms in over 3,000 contracts and used its to prevent reviews from being published on review site ProductReview.com.au, the ACCC said.
The home builder said it would not include the clause in future contracts.
In November, the ACCC won its first case over online reviews when the Federal Court found property manager Meriton Property Services violated the law by trying to keep guests at its properties from posting bad reviews on TripAdvisor.
Meriton, which operates serviced apartments at 13 properties in New South Wales and Queensland, engaged in shady tactics to prevent guests it thought would leave a bad review from getting an email from TripAdvisor prompting them to post a review, the Federal Court found.
Through its Review Express program, TripAdvisor emails recent customers from participating businesses, who provide the customers’ emails to TripAdvisor, and prompts them to submit a review. Meriton engaged in misleading or deceptive conduct by inserting additional letters into guests’ email addresses provided to TripAdvisor so that the prompt email never reached them or not sending guests’ email addresses to TripAdvisor, the Federal Court found.
On several occasions Meriton tried to thwart the email from being received by all guests of its hotels during periods when there were infrastructure or service problems, the Federal Court found.
“Many consumers base their purchasing decisions on reviews they get through sites like TripAdvisor. It’s therefore vital the reviews on these review sites are not manipulated and accurately reflect all customers’ opinions – the good and the bad,” Court said at the time.
The ACCC brought a similar case in March against Perth-based home building service Aveling Homes for allegedly creating and maintaining review sites it pretended were independent and for allegedly removing or obscuring unfavorable reviews.
Aveling denied obscuring reviews and misleading or deceiving customers, telling the court customers were too savvy for that.
“Consumers are skeptical of online reviews and rely on a range of information sources before making decisions, particularly for expensive purchases and will not rely on a single review site alone,” the company said in documents filed with the Federal Court in Perth.
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