CMA seeks information on online reviews and endorsements

26 Feb 2015 10:05 AM

The CMA yesterday launched a call for information on how information in online reviews and endorsements is used.

It is inviting consumers, businesses and other interested parties to come forward with their views.

Online reviews and blogs are playing a growing role in helping consumers to make shopping decisions, including finding hotels, selecting tradespeople and choosing cosmetics. Research suggests that large numbers of consumers are using such online resources. They are also important to those businesses whose products and services are reviewed on them.

The Competition and Markets Authority (CMA) is committed to looking at evolving online markets. It is aware of a number of potential concerns about the trustworthiness or impartiality of information in some reviews and endorsements that is being provided to consumers. The CMA is therefore keen to look at whether these concerns are valid, as it is important that these sites work as well as they can for consumers and for businesses.

The CMA will be looking at a range of online reviews and endorsements. These are found on web blogs, video blogs, social media, specialist review sites, trusted trader sites, retail platforms and retailers’ own websites. The CMA will also look at the roles that media companies, online reputation managers and search engine optimisers play in helping businesses to promote themselves and manage their image in relation to blogs and review sites.

Nisha Arora, CMA Senior Director, Consumer, said:

The information contained in online reviews and endorsements can be a powerful force in the hands of consumers. Informed consumers make better decisions, driving competition on price and quality. Businesses have always known that ‘word of mouth’ is one of the most important factors for potential customers; what online reviews and blogs do is to provide a greatly amplified version of this. However, for this sector to work well it is important that this information is genuine, relevant and trustworthy.

One of our priorities as a new authority is to take a closer look at developments and practices in evolving online markets. We are calling on consumers, businesses, review sites, bloggers and others who play important roles in this sector to help us understand how well it is working before we consider whether further action is needed.

More detail is available on the call for information page, including information on how to respond and contact details for those who want to submit specific information or research.

The deadline for responses to the call for information is 25 March 2015.

Notes for Editors

  1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading (OFT), as amended by the Enterprise and Regulatory Reform Act 2013.
  2. The CMA also recently announced a call for information on the commercial use of UK consumer data and is still inviting responses until 6 March 2015.
  3. A 2014 survey estimated that 81% of UK consumers read customer reviews/ratings and 47% read blogs (Deloitte, The Deloitte consumer review – The growing power of consumers, 2014).
  4. The CMA carries out calls for information under its general review function in section 5 of the Enterprise Act 2002. Information gathered from a call for information can help the CMA to determine whether further action is warranted by the CMA or others. There are a range of options, including: no further action; launching a market study covering this sector, or a part of it; initiating consumer enforcement action; advocating legislative change to government; providing guidance to industry or consumers, or both; and /or seeking voluntary action from the industry.
  5. The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) contain a general prohibition on unfair commercial practices, in particular misleading and aggressive practices. They also contain 31 banned practices which are prohibited in all circumstances. It is a banned practice to use editorial content in the media to promote a product where a trader has paid for the promotion without making that clear in the content or by images or sounds clearly identifiable by the consumer. It is also a banned practice to falsely claim or create the impression that a trader is not acting for purposes relating to his trade, business or profession, or to falsely represent oneself as a consumer. Further information for businesses on their obligations under the CPRs is available on the CMA’s web pages.
  6. The OFT previously received undertakings from Handpicked Media Limited and MoreNiche Ltd, requiring them to comply with the CPRs and clearly identify when promotional content was paid for.
  7. Enquiries should be directed to Siobhan Allen or Simon Belgard by ringing 020 3738 6460 or 020 3738 6472.
  8. For information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn.