The CMA's new powers - fail one question and your business is vulnerable

There have been three important events in the last eighteen months regarding online reviews that every business should be aware of:

• The Digital Markets, Competition and Consumers Act 2024 gave the CMA vastly increased powers to sanction businesses misusing online reviews
• The CMA has invested in AI software to speed up the identification of businesses likely to be in breach
• The CMA has begun taking action, initially regarding five businesses (one being a review site), where it considers there have been potential breaches

Below is a checklist, in the form of the five questions to which the answer will be a simple 'Yes' or 'No', so you can identify if your business is in breach, and therefore what action it needs to take, if any, to avoid sanction by the Competition & Markets Authority (CMA).

1.  Does your business selectively invite customers to write reviews, either to a review site or to Google (or both)?

2.  Does your business employ any mechanism - a formal survey or a simple 'were you happy with our service?' type email to identify 'happy customers' before inviting them to write a review? 

3.  Does your business have control over the timing of reviews written by your customers?

4.  Can your customers only write reviews of your business if specifically invited to do so?

5.  Does your business use a review site - Trustpilot, Feefo etc. - to identify those customers most likely to leave a 5* review and then invite those, and only those, to post a review to Google?

If you cannot answer 'No' to all of the above five questions, your business is in breach of the CMA's core regulations*.

*We cannot, of course, make any promises as to any course of action the CMA is likely to take in any individual case, but logic indicates that businesses that have taken steps to correct breaches, or that were in breach in the past but are no longer, are unlikely to be the first targets for regulatory or legal action by the CMA.

What will the CMA do?

First: what it will not do: the CMA will not warn any business that it is about to become subject to either investigation or sanction; it will consider that its press releases over the years have provided sufficient warning.

Past history indicates that the CMA is highly unlikely to initiate action against a business and subsequently find it not at fault. The CMA will only initiate action where it considers that it has a watertight case. 

CMA fines, even before the 2024 Act gave them the power to levy fines of up to 10% of a business's turnover, were never insignificant. The case of the four Bristol estate agents that were fined £370,000 for illegal price-fixing is instructive in this regard.

The 'we're too small/insignificant' argument that we have heard so often in the past ceases to hold water now that whistleblowers, combined with the CMA's own AI, make it economically viable for the CMA to sanction businesses regardless of size. From our discussions with the CMA, resources are a critical factor, and anything the CMA can do to bolster these or show HM Treasury that its ROI is providing a positive financial impact will undoubtedly be viewed positively.

Our advice?

It couldn't be simpler: comply with the CMA regulations. Now. 

How?

We fully understand the reasons why businesses have cherry-picked (invited only customers they were certain would write a positive review) and/or gated (pre-qualified customers before inviting only those likely to leave a 5* review) in the past. Inviting 'everyone' was considered a risk too far. But the benefits of having a great score, especially a great score on Google, were just too obvious to ignore.

Unfortunately for such businesses, that option was never on the table: the CMA's regulations have expressly forbidden such a strategy for many years now. One can see the CMA's logic: how are consumers to trust a business if it is somehow able to filter reviews to ensure that only those that show the business in a positive light ever make it onto the web? On top of that, how are consumers to trust reviews as a whole?

This has, until now, given a great many businesses a stark choice: avoid engaging with reviews altogether or flout the CMA regulations. The first sacrifices far too many benefits (increased enquiry rates and lead flows, social proof and SEO, to name but a few). It also runs the increasing risk that a minority of disgruntled customers can 'capture' a business's online image. 

The second of those is no longer viable, as we have explained above. The risk of sanction is now just too great (and the sanctions are far too severe to contemplate). 

Achieved thanks to moderation - search 'estate agent Kingsbury' and see how this business shines in full compliance with the CMA regulations

That's where moderation - the act of employing an external moderator to ensure reviews are as accurate and reflective of the reviewer's experience of the business as possible*, comes in - it's an extra expense, admittedly, but one that will a) ensure compliance with the CMA regulations and b) protect your business from factually inaccurate, potentially misleading or just plain unfair reviews. 

*Moderation relies on the cooperation of the reviewer. In our long experience, an average of 7 reviews in 100 require intervention of some kind by our moderators, to invite the reviewer to correct errors of fact or rewrite a potentially misleading comment. In only 3 cases in 100 where our reviewers become involved does the reviewer decline to do so. Put yourself in their position: who, knowing the business will post a response to their review, will persist in writing one that contains inaccuracies?

The 'Perfect Business' - does it need moderation?

We come across these less and less these days. Why? Not because businesses have become slacker, but because more and more consumers have come to understand the power a single well-crafted review has - especially if written on Google - to hurt such businesses.

We continue to encounter many businesses whose perfect Google score of 5.0 has been impacted by an inaccurate or misleading negative review. Some might reasonably say, 'But that's just one among dozens (hundreds even)', and they would be mathematically correct. But consumers have also learned how to read reviews: these days they will often select the 'lowest' button...

...and if the reviews they then read are credible, they will often move swiftly on to another similar business.

How do we know this? Because of the urgent calls we receive from businesses where a single negative review, often inaccurate and sometimes unfair in the extreme, has resulted in their inbound enquiry flow falling measurably. Retroactive review management - known as 'reputation management' in the trade - is far less effective than proactive moderated review management.

And Finally...

Even when businesses understand all of the above, they are left asking one crucial question: 'Does this mean we have to actively invite every single one of our customers/clients/patients to write a review?'

The answer is 'No'. The 'golden key' to review management is twofold: first, an intimate understanding of the CMA regulations and then this button, allowing anyone to review your business when on your website...

To see this working live - both the 'Write a review' process and the 'What is HelpHound?' explanation, click here

...the key word here is 'allow'. This makes your review management practice compliant. The CMA understands that there are circumstances where a business wouldn't want to proactively invite a customer to write a review, but they do require you to provide a mechanism to 'allow' them to do so. We probably don't need to repeat it, but all reviews written by people clicking that button are sent directly to pre-publication moderation. How much better than a factually inaccurate or misleading review on Google?

Further reading...

• How the CMA uses its direct enforcement powers

Online reviews and legal compliance - an important insight

It may come as a surprise to some readers that this investigation remains open and ongoing

We were recently lucky enough to have a detailed conversation with a senior staffer at the Competitions and Markets Authority; we say 'lucky' because the CMA doesn't usually take inbound calls unless they emanate from HM Treasury or the Department for Business and Trade. 

What follows is an analysis of the current situation as regards the regulation of online reviews, and the enforcement of that regulation. First: points that emerged from that conversation:

1. Once opened, a CMA investigation remains open until formally concluded.
2. The fact that the CMA remains silent on an investigation for a period - months or even years - does not mean that the CMA's investigation is dormant.
3. The CMA has no duty whatsoever to warn or alert those under investigation.
4. All of the CMA's investigations - and the findings thereof - have the full force of the UK law.

So, combining those four points with the information and knowledge we have gathered over the years, what a) do we think businesses ought to be doing in relation to review gathering and display? and b) what action do we think the CMA will take at some future date?

Let us take that last point first: the CMA currently has an open investigation into the abuse of online reviews. This is a matter of public record and it focuses on two of the CMA's core rules...

• the explicit ban on cherry-picking: choosing pre-identified 'happy' customers before inviting a review - anywhere (own website, review site or Google)

• the explicit ban on gating - using any mechanism to pre-qualify a customer's opinion. Commonly used mechanisms include email questionnaires and in-app ratings

What should businesses be doing? 

Here's the advice we give - as standard - to every business we meet for the first time.

1.  Comply. To the letter. Don't cherry-pick*. Don't gate*.

Reasoning: when the CMA do act they will do so without warning. One day a business will look great, with hundreds or even thousands of great reviews on Google or Trustpilot and the great scores that accompany them; the next day their hard drives will be at 25 Cabot Square in Canary Wharf being pored over by forensic tech specialists.

If you doubt the CMA's willingness to take such action please read about the estate agents that were fined for price-fixing, a situation once endemic (we heard the squeals: 'Everyone does it') but which stopped overnight. The same will, one day, happen with online reviews - after all, any action which bends the rules to benefit the business and thefore misleads the consumer is manna from heaven for the CMA. The only thing we cannot predict is exactly when or where the CMA will strike. It could be tomorrow, or it could be in ten years' time. 

Now, before you - quite reasonably - say 'But we will open the floodgates to inaccurate, misleading and/or just plain unfair reviews, which will be of no help whatsoever to us as a business or our potential customers' read on...

*Cherry-picking: selecting proven 'happy' customers to invite to write a review. Gating: using a mechanism to pre-determine those customers most likely to write a positive review, commonly performed by sending out a questionnaire.

 

2.  Adopt a moderated system of review management.  

A score of 4.0 out of 5 is fine if a business is in online retail, but the professions and service businesses need to score as close to 4.9 as is humanly possible, because their potential clients/patients are so much more sensitive to negative reviews. They are also far more likely to actually read the business's negative reviews, rather than being simply guided by its headline score.

That doesn't only mean doing a great job for your clients/patients but adapting to address the constant drip of misconceptions and factual inaccuracies contained in a significant minority of reviews (we often meet businesses that say 'We're really good at what we do' and we believe them, but then we ask them 'Do you trust all your clients/patients to write an accurate and thruthful review?' The penny then drops.

Moderation is the process of checking reviews for factual accuracy. We have calculated that our moderators need to involve themselves in about 7 per cent of reviews for the average client (that excludes correcting spelling and grammar, which is done as a matter of course). Most important of all, successful moderation (and over 97 per cent of all interventions are successful) results in a higher overall score (an average of 4.8 as opposed to 4.5) as a direct result of far fewer inaccurate, misleading or unfair reviews being published.

And what will the CMA do (to those flouting the rules)?

They will descend on a business or a selection of businesses, possibly prompted by a whistleblower, without warning (think 'VAT inspection'). They will use their statutory powers to confiscate evidence in support of a case that will already have been built up over a period of time.

They will then issue a fine - these can be substantial, six or seven figures, and further sanctions against individual directors if these are warranted (for an example see the link embedded in the paragraph under '1. Comply' above).

Admittedly, the chance of the first investigation landing at the door of any single business is small, but when it does happen there will be no shortage of disgruntled ex-employees and past customers queueing up to tell the CMA of their experience with similar businesses. And, as we have said so often in articles like these, why not comply when the benefits are so great anyway? Especially when viewed relative relative to the cost (see below).

Meanwhile - businesses should not relax

Two businesses: one fully compliant, one, from the CMA's legal point of view, guilty of breaching its core regulations. The non-compliant business can become fully compliant overnight.

Supposing a business is either gating and/or cherry-picking (and we see such businesses every day) what are the consequences? They are twofold...

1. Every day a business continues to be in breach of one or more of the CMA's regulations regarding reviews is another day of evidence piling up in email in/outboxes and on hard drives (not to mention on Google). Our view is that a business that becomes compliant having been in historical breach is far less likely to attract the attention of the regulatory authorities than one that continues to be in breach.
2. The fact that a business is in breach is seldom lost on members of staff or competitors (bearing in mind that current members of staff can become 'ex-members of staff' and take positions with competitors). We have seen multiple examples where the fact of a business being in breach has been used in a competitive pitch, along the lines of 'Yes, but they only look as good as they do because they are breaking the law.'

Conclusion

This article focuses on the CMA and sanctions for illegal manipulation of online reviews. However, there are so many positive benefits for a business that adopts professional review management. Whilst being able to sleep at night in the sure knowledge that the CMA will not come knocking at 9.05 am is an undoubted plus, the day-to-day knowledge that factually inaccurate and potentially misleading reviews are being managed pre-publication, on either the business's website and/or on Google and the consequent benefits of a higher score and fewer unfairly off-putting reviews.

Further reading

We see compliance as step one. Then we come to the positive aspects of membership...

• Results - more clicks, more calls, resulting in more - and higher quality - business
• Moderation - what every professional and service business needs to safely interact with online reviews

And the cost?

• Our fee structure
• Our guarantee

Reviews - you are all breaking the law!

Got your attention*? Good. For years now we have been tactfully explaining the law as it currently stands - in the UK and the EU - to businesses, but still we see the epidemic grow. So please excuse us if this article is a little blunt.

*If you're already a HelpHound client you can relax, you aren't breaking the law. This article is for those yet to join.

This business's Google score and the reviews underlying it look impressive; until you realise that they have been acquired illegally.

First: the law

In simple terms, you (businesses) are not allowed to...

1. select customers to invite to post a review - anywhere, to Google, to your own website, to Trustpilot, or anywhere else
2. control the timing of when your customer is invited to write a review
3. delete or otherwise filter out reviews you 'don't like'
4. incentivise customers to write [positive] reviews

Let's see what most businesses are doing currently...

1.  They are hand-picking customers to invite to write reviews

...which is against the law

2.  They are controlling the timing - by only inviting/allowing reviews when they think the customer is most likely to rate them 5* (it is fine to email a customer to invite them to write a review, just not using a system that prevents them writing a review at another time of their own choosing)

...which is against the law

3.  They are filtering out unhappy customers by 'gating': using a feedback mechanism to pre-qualify customers and then only inviting those that have previously indicated their satisfaction with the business to write a review

...which is against the law

4.  Offering cash, discounts, rewards or vouchers for positive reviews.

...which is against the law and Google's terms of service

Now, what do we hear when we speak to some of the businesses engaged in these illegal - yes, illegal - practices?

• 'Everyone else does it'

No! 'Every other business' is not dishonest. But some business people appear to see this form of cheating - sorry law-breaking - as a badge of honour. It is somehow seen as 'macho' to break the law. 

The CMA have announced a crack-down and the press are hot on the trail of businesses that manipulate reviews

• 'We would be swamped with bad reviews if we allowed anyone to write one'

This bears thorough examination. Would the bad reviews come because you are running a substandard business? Or because you don't trust your customers to write reviews that accurately reflect their experience of your business? 

If the former, then - respectfully - you need to address the issues within your business before you engage further with reviews. If the latter - a more reasonable objection - you need a moderated review management system, of which more later

• 'One 'unfair' review could do untold damage to our business'

And so it could, but law-breaking is not the answer; stories like this one make businesses extremely wary of opening themselves up to reviews without some form of illegal filtering. 

Again the answer is moderation; independent moderation allows you to invite all your customers to write a review whilst minimising the chances of inaccurate or potentially misleading comments appearing in print

• We won't get caught

That's as maybe - although the CMA has reviews and their abuse right in its sights, and it has teeth (remember the estate agents fined £600,000 for price-fixing? that was the CMA). 

What is certain is that your competitors will notice, and they won't be backwards in letting your potential customers know the you are decieveing them. And who wants to entrust their life savings/home sale/health/legal affairs to a business that breaks the law to look good?

• 'It's expensive to comply'

This is referring to the reaction to the idea of adopting a professional review management strategy. The short answer? You don't have an option. The long one: professional review management, which incorporates moderation to minimise the likelihood of inaccurate or misleading reviews ever seeing the light of day, invariably earns a business money. 

How so? Because hosting independently verified reviews on a business's website is proven to drive clicks and calls and therefore new business (there are many more benefits - see 'Our pitch to you' below)

How about these stars? They light a business up in local search - and drive calls and clicks. And no wonder: every survey ever conducted has proven that a great rating and a significant amount of reviews does just that. Put it this way: if we were to tell the business above that they were going to lose those stars and that score - and revert to looking like their four other competitors in this search - and lose0 this on their own website, what do you think their reaction would be?

We rest our case.

Further reading...

• The Competition and Markets Authority rules - the law - explained in detail
• Moderation - and how it protects business and consumer alike
• Estate agents and banks manipulating reviews - the Times' commentary
• Our pitch to you

No, you're still breaking the law relating to reviews!

Regular readers will know that we never cease to bang the compliance drum - and clients know the benefits (commonly called 'being able to sleep at night'). The reason for this article is that many - some might say most - businesses that have woken up to the power of reviews, especially Google reviews, are still breaking the law. 

Breaking the law?

The CMA is a government body and its rules have the force of law.

What are those rules?

There's a full analysis here, but in a nutshell, they say two things...

1.  If you invite any of your customers to write a review - anywhere - you must enable them all to do so

2.  Your customer - not the business - must control the timing of the review

The rationale behind these rules is clear: the reviews of the business should be able to provide an accurate and unvarnished guide for prospective customers - otherwise why have reviews in the first place?

What provoked this article?

Two meetings and one chance encounter.

In both meetings, the potential clients both claimed to be compliant but were not. In the 'chance encounter' we met two full-time employees of a well-known London multi-branch estate agency who were spending the morning 'door-dropping'. 

When challenged on the subject of compliance all three said the same things (in different ways):

• anyone can write a Google review, so it must be OK for us to selectively invite clients that we know will write a positive [Google] review to do so
• we have a link inviting reviews on our signature block, surely that makes us compliant?
• our head office controls the timing of the review invitation 
• you - and by implication, the CMA - cannot possibly expect us to invite [insert name of unhappy customer] to write a review?

The answer to all of these points? Each is either an illustration of non-compliant - illegal - behaviour or illustrates insufficient compliance (the email signature block).

The point is - and this was highlighted by the two staff we met in the street - is that compliance is not expensive (and has massive attendant benefits*), certainly far less expensive than sending staff out to door-drop (and we're not suggesting the business concerned stops doing that).

Not expensive?

It can be free - simply install a Google reviews widget on your website. That, for a complex transactional or professional business - legal, financial, estate agency, medical for example - might be high risk (customers might accidentally - or even wilfully - write inaccurate reviews).

The other option is to employ a moderated review management system - like HelpHound - that costs less than three figures a month (and certainly a lot less than sending two members of staff door-dropping for a morning!) and rest assured that a) inaccurate or potentially misleading reviews are very unlikely to see the light of day and b) be compliant from day one.

*How can compliance either save or earn a business money? 

It's simple when you think about it: non-compliance, where reviews are concerned, is so obvious - if a business has more than ten Google reviews it is definitely proactively inviting them, and if it has no mechanism visible on its website that allows customers to write a review at a time of their own choosing it is almost certainly in breach of one or both of the CMA regulations mentioned above.

That information is dynamite in the hands of a competitor: all they have to say is 'Did you know that [Brown & Co] only invite their happy customers to write reviews' and all those months and years of work building up a glowing reputation go straight down the drain (we have even seen reviews of businesses that say 'don't use this business, I was unhappy and they didn't invite me to write a review' - the CMA would love those.

On the plus side, having great reviews - on your own website and on Google - has been proven to earn money. See how many more calls an clicks to expect here.

The key to compliance - and an awful lot more besides...

This image is taken from a HelpHound client's website; that 'Write a review' button at top right makes our client compliant because anyone can click on it and submit a review. The review will be moderated by HelpHound - read for obvious factual inaccuracies or comments likely to mislead a potential customer (as well as establishing, as far as possible, the bona fides of the reviewer - no one benefits from fake or malicious reviews)

The customer retains the right to have their review published at a time of their own choosing and will be invited - automatically - to copy their review to Google. That results in this...

Looking great - on the business's own website, on Google - compliantly, and for less than £100 a month.