It is common practice to look up a business online and read customer reviews before purchasing their products or services. Online reviews have become vital to a business' success. This means that bad reviews are considerably damaging and can be the reason for a decline in revenue. As business owners rely on good reviews, it is important to understand when you can take action against someone who leaves a bad online review of your products or services.

However, if the bad review is a customer's honest opinion of their experience and tell the truth, it should be noted that there is no legal action that you will be able to take against them. This article will detail the options you have when someone leaves a bad review online.

What Steps Should I Immediately Take?

Before initiating any legal action, you should take steps to determine the identity of the person who posted the review and confirm that they were a customer of yours. If you have confirmed that the person was a customer, you should take the following steps:

  1. comment on the review addressing their concerns;
  2. if the review is untrue or offensive, you could report the review to the platform and request they have it removed; and
  3. if it is appropriate, you could contact the customer and provide them with a refund or make some attempt to make amends.

Defamation Claim

To show the online review is defamatory, you must prove that the review is false and negatively affects your business or employee's reputation.

The elements that need to be established for a defamation claim include that the defamatory review:

  1. was published and made available to another person or to the public;
  2. identifies or is about your business or employee; and
  3. is, in fact, defamatory, meaning that it hurt your business' reputation.

If the online review identifies and defames an employee, it is likely that you can bring a claim against the reviewer for defamation. However, if the review defames your business, you can only bring a claim against the reviewer if you have fewer than ten employees.

If they can prove that their review is substantially true, they might have a defamation defence. Courts may consider defamatory material to be true if the reviewer can prove that their negative review's 'gist' is true.

If the reviewer was merely expressing their opinion, they might have a defence to a claim of defamation. To rely on the defence of honest opinion, they would have to show it was:

  1. obvious to the third party or audience that they were merely expressing their opinion. For example, they thought the food at your restaurant was overpriced and the steak was overcooked;
  2. a matter which is in the public's interest. For example, you were commenting on a high profile business person; and
  3. based on 'proper material', meaning their opinion was based on substantially true material. For example, if they watched a movie and commented their thoughts on the film.

However, you could challenge their defence by proving that they did not honestly hold that opinion when they published the review.

Injurious Falsehood Claim

If your business has suffered actual financial damage as a result of false statements in an online review, they may bring a claim of injurious falsehood. The key elements of injurious falsehood are that:

  • someone makes a false statement about the business' goods or business;
  • the statement was published to a third party;
  • there must be malice on the part of the reviewer; and
  • you must show actual damage as a direct result of the statement.

To bring a claim of injurious falsehood, the negative online review's statements must be completely false.

Australian Consumer Law Claim

If you discover that a competitor has published a negative review about your business or, has paid someone to, you may claim the competing business for misleading or deceptive conduct under the Australian Consumer Law (ACL). If you suspect that a competitor has written, encouraged another person to write or paid someone else to write a bad online review, you may consider complaining to the ACCC. Regulators do not wish to see businesses use legitimate online consumer forums to unfairly discredit competitors and deceive consumers. If a court finds they have breached the ACL, they may face penalties for engaging in misleading or deceptive conduct.

Key Takeaways

Online reviews are vital to a business' success, so bad or negative reviews can cause serious financial damage. You may be able to take legal action if the bad online review is:

  • defamatory;
  • considered injurious falsehood; or
  • misleading or deceptive.