New Zealand holiday rental booking company - Bachcare, convicted and fined for misleading online reviews

Holiday rental management and accommodation company Bachcare has been fined NZ$117,000 for misleading consumers by altering and withholding publication of online reviews posted by users of its accommodation services.

Following a Commerce Commission investigation Bachcare pleaded guilty to two charges under the Fair Trading Act 1986, in what is the first litigation action the Commission has issued over online reviews.

Between 1 June 2017 and 28 September 2018 Bachcare edited customer reviews which were published on its website, removing negative comments about the rental properties listed by the company, and/or Bachcare’s maintenance and management of properties.

Bachcare misled consumers through the creation of artificially positive impressions about certain properties and its services. Bachcare’s conduct included:

• deleting comments regarding the cleanliness and amenities of properties, and regarding reviewers’ experience of properties:
• withholding from publication reviews for properties to which customers had given a star rating of lower than 3.5 out of 5.
• This conduct meant that no listed property at the time could display a customer rating lower than 3.5 stars out of 5.

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 this 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. 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,” says Ms Rawlings.

In his written sentencing judgment Judge Singh noted, “Whilst the harm 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.”

A full version of Judge Singh’s sentencing notes can be found on our website.

Online retail continues to be a priority area for the Commerce Commission this year.

Background

Bachcare is a nationwide holiday rental-accommodation management company. It actively manages the bookings and subsequent stays of tourists in short-term accommodation around New Zealand. Bachcare currently manages around 2000 properties around the country, with more than 150,000 customers per year.

Online review

You can find more information in our guidance for collecting and publishing online reviews on our website.