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Federal Court judgment should serve as a warning to SMEs
A small business has gone into liquidation following a $125,000 fine from the Federal Court after it faked online reviews, something which smaller law firms should reportedly take note of.
Lauren Croft
Adelaide-based Star Plus Group was recently hit with a $125,000 fine after it was found to have posted almost 150 false testimonials about its business over a two-year period – something boutiques and SME businesses have now been warned not to do.
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The reviews were posted under fake names on the Yellow Pages website and productreview.com.au, and Star Plus stated on its website that it had a 4.8 Yellow Pages rating on various dates.
Between 21 June 2017 and 31 July 2019, Star Plus posted 142 reviews under “invented names falsely purporting to be real testimonials of customers who had engaged Star Plus Group for electrical, plumbing or gas fitting services”, the Honourable Shaun Brendan McElwaine said in his judgment.
Further, the business was found to have falsified nine invoices in order to post a number of the fake reviews, which were “false, were addressed to fictitious individuals and were prepared and submitted to facilitate the misleading and deceptive conduct”, according to the judgment.
Between November 2019 and May 2020, another six reviews were found to be fraudulently posted by the business, and McElwaine J found that overall, “the conduct was deliberate, was sophisticated and well-planned”.
“Other businesses should not suffer the unfair commercial disadvantage of not providing goods or services to consumers because a competitor is perceived as having a more favourable consumer rating,” he said.
Star Plus was ordered to pay a total penalty of $125,000 to the state of South Australia.
In a LinkedIn post following the judgment, legal practitioner and senior lecturer at the University of Adelaide Law School Mark Giancaspro urged boutique and SME firms not to write fake reviews for their business – as it “is illegal and can cost you dearly”.
“Posting fake testimonials in respect of goods or services will likely violate [various] provisions of the Australian Consumer Law,” he wrote.
According to ACCC guidelines, business reviews should be “independent and reflect the genuine opinion of the person who experienced the product or service”, and it is illegal for a business to “create fake or misleading reviews” or to ask others to do so.
While organic growth is “definitely becoming more challenging” for boutique firms, a number of firm owners earlier this year said that for smaller firms, creating their own brands and growing their referral network results in a strong, authentic client base.
Back in 2021, as reported by Lawyers Weekly, numerous small law firms announced on their social media that they had been awarded a place on a top 10 list, when, in fact, they had paid to be there.
This came after a fake news site masquerading as a legitimate publication published a listicle of 15 firms “to watch”, after approaching a variety of smaller firms seeking a “small registration fee”, which reportedly was as high as $500.
Despite the site targeting businesses of all kinds, law firms and lawyers are expected to run due diligence in all things they do – thus exposing them to potentially higher penalties for breaches of Australian Consumer Law and engaging in conduct that is “misleading or deceptive or is likely to be misleading or deceptive”.
