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JULY 2014
Welcome to Risky Business.

While online testimonials can be a useful and genuine marketing tool, there are a number of risks for any business.

This month’s article discusses the risks of posting fake testimonials or reviews.

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The Risks of Faking It

Why you should not create fake testimonials or reviews

The social media trend these days is to encourage customers of a business to write reviews about them on various sites. These include the mainstream Facebook and Google plus, but also specialist sites such as “Eatability” for Cafes and Restaurants, or even directories such as “Hot Frog” and “True Local”.

These are an excellent way to add credibility to your brand. It does appear to add legitimacy to how good a business is and is also an opportunity for a business to obtain useful feedback.

However while online testimonials can be a useful and genuine marketing tool, there are a number of risks for any business.

Aside from having a negative or even defamatory review from a disgruntled customer, there are also risks connected to making or inducing false or misleading representations about testimonials. These can be breaches under the Australian Consumer Law for which the ACCC will seek declarations, penalties, injunctions and corrective notices.

It is very tempting to write your own reviews and make it look like they have come from other people. Surprisingly this is done more than you think!

"... alleging that it was involved in the posting of fake online testimonials."

Recently* The Australian Competition and Consumer Commission (ACCC) instituted proceedings in the Federal Court against A Whistle (1979) Pty Ltd, the franchisor of the Electrodry Carpet Cleaning business, alleging that it was involved in the posting of fake online testimonials. 

Electrodry is a franchised business that provides carpet, drapery, grout, upholstery and mattress cleaning services with over 100 franchises in Australia.

The ACCC alleges that Electrodry made false or misleading representations by a contractor, acting as Electrodry’s agent or at its direction, posting fake testimonials relating to Electrodry Carpet Cleaning on the internet; and induced or attempted to induce its franchisees to make false or misleading representations by posting fake testimonials on the internet.

The ACCC alleges that Electrodry’s conduct resulted in fake testimonials that appeared on a number of review sites, including Google and True Local.  It is alleged that the testimonials were written and posted by people that were associated with, or contracted to, Electrodry, and not by its genuine clients as the testimonials implied.

The ACCC has warned Consumer issues in the online marketplace continue to be an ACCC priority according to the ACCC Deputy Chair Mr Michael Schaper.

When it comes to managing such a risk, if there is an unintentional or accidental testimonial provided by an employee or by a friend, and not at the direction of a Director or an Officer of the business, you can defend such claims under a Statutory Liability policy or this equivalent section within a Management Liability policy. However, if deliberately orchestrated by the Director or Officer themselves, there is unlikely to be any insurance protection for such wilful and intentional acts unless you can prove that you have been implicated by someone else’s wrongful act vicariously.

If you would like to discuss these types of risks further, please call <<Rep First>> Cooper, an expert who could save you! Phone <<Rep Mobile>>.


Birthday Blues

Last week was my birthday and I didn't feel very well waking up on that morning. I went downstairs for breakfast hoping my wife would be pleasant and wish me Happy Birthday, and possibly have a small present for me.  

As it turned out, she barely said good morning, let alone 'Happy Birthday'. 

I thought, ”Well, that's marriage for you, but the kids, they will remember. My kids came bounding down stairs to breakfast and didn't say a word!”

So when I left for the office, I felt pretty low and somewhat despondent. As I walked into my office, my secretary Jane said, 'Good morning boss, and by the way Happy Birthday!’ It felt a little better that at least someone had remembered. 

I worked until one o'clock, when Jane knocked on my door and said, “You know, it’s such a beautiful day outside, and it is your birthday. What do you say we go out to lunch? Just you and me!”

I said, “Thanks, Jane. That's the greatest thing I've heard all day. Let's go!”

We went to lunch. But we didn't go where I normally would go. She chose instead at a quiet bistro with a private table. We shared a bottle of red, and I enjoyed myself immensely.

On the way back to the office, Jane said, “You know, it's such a beautiful day, we don't need to go straight back to the office, do we?”

I responded, “I guess not. What do you have in mind?”

She said, “Let's drop by my apartment, it's just around the corner.”

After arriving at her apartment, Jane turned to me and said, “Boss, if you don't mind, I'm going to step into the bedroom for just a moment. I'll be right back.”

“Ok.” I nervously replied.

She went into the bedroom and, after a couple of minutes, she came out carrying a huge birthday cake, followed by my wife, my kids, and dozens of my friends and co-workers, all singing 'Happy Birthday'.  And I just sat there. On the couch. Naked!

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