Bachcare convicted of misleading consumers

Misleading consumers – via the editing and withholding of online reviews - has earned holiday rental accommodation company Bachcare a conviction and a hefty fine.

Friday, December 20th 2019, 10:43AM

by The Landlord

Bachcare was handed down a fine of $117,000 by the Auckland District Court this week after pleading guilty to two charges under the Fair Trading Act 1986.

The charges came after a Commerce Commission investigation into conduct that took place between 1 June 2017 and 28 September 2018.

According to the Commission, Bachcare edited customer reviews published on its website and removed negative comments about the rental properties listed and/or Bachcare’s maintenance and management of properties.

Bachcare also withheld from publication reviews for properties which customers had given a star rating of lower than 3.5 out of 5. This meant that no listed property could display a customer rating lower than 3.5 stars out of 5.

The Commission alleged that, as a result of this conduct, Bachcare misled consumers through the creation of artificially positive impressions about certain properties and its services.

This conduct led to the Commission taking Bachcare to court earlier this year. It was its first litigation action over online reviews

In his judgment released today, Judge Ajit Swaran said that while the harm [of the conduct] cannot be quantified, the offending conduct infringed the purposes of the Fair Trading Act.

“It compromised the interests of the consumers, fair competition and an environment in which consumers and businesses participate confidently.”

In the wake of the judgment, the Commission has made it clear that online retail will continue to be a focus for it going forward.

Commerce Commission Chair Anna Rawlings says online reviews are an important source of information for consumers contemplating the purchase of goods and services.

“This is particularly so in markets such as short-term property rentals, where customers may not have access to other information to help them to decide whether a property is suitable for their needs.

“Consumers have a right to expect that reviews solicited from past customers will be published in a way that accurately represents the feedback received.”

In the Bachcare case, consumers had no way of knowing that star ratings were inflated, or that the text of some reviews had been edited to cast the property in a more positive light, Rawlings says.

“This type of conduct undermines the trust that consumers will place in reviews of products or services. All businesses who collect and present online reviews must faithfully present genuine customers reviews.

“Any discretion exercised by the trader over the publication of reviews must be made very clear, otherwise consumers can be misled and traders risk breaching consumer law.”

The provision of short-term holiday rental accommodation is big business so it’s important the online providers get every step of the process right.

To that end, the Commission provides guidance on collecting and publishing online reviews. It can be found here.

Tags: commerce commission complaints court landlords property investment property management regulation rental market