Meriton building, Bathurst St, Sydney Sardaka, Wikimedia Commons

The Federal Court has fined Meriton Property Services $3 million for breaching the Australian Consumer Law. Australia’s largest apartment developer has been found to have been manipulating reviews on travel website TripAdvisor to prevent guests from leaving negative comments on its properties.

Meriton offers accommodation under the name Meriton Serviced Apartments. During a specified period, the company offered serviced apartment accommodations in at least 13 properties in NSW and Queensland. TripAdvisor offers a service called Review Express wherein accommodation providers send TripAdvisor the email addresses of their recent customers who have consented to their details being passed on. TripAdvisor then emails the customers to ask them to submit a review of their recent experience with the concerned properties.

In November 2017, the court found that Meriton implemented a practice of “masking” email addresses. This prevented guests that Meriton suspected would give negative reviews from receiving TripAdvisor’s “Review Express” prompt email. To “mask” the guests’ email, they inserted additional letters into the email addresses guests provided so the prompt email from TripAdvisor would never the customers. Or they would just not send guest email addresses to TripAdvisor.

The strategy deliberately minimised the number of negative reviews that the guests posted on TripAdvisor, thereby creating a false impression that the Meriton properties were favourable or that the customers’ experiences were positive.

On Tuesday, the Federal Court ordered Meriton to pay penalties of $3 million for its sneaky strategy. Its manipulation of the TripAdvisor reviews was found to be in breach of the Australian Consumer Law.

“Meriton’s management directed staff to engage in ‘masking’ to stop potentially negative reviews from appearing on TripAdvisor. This gave the impression Meriton accommodation was of a higher standard than otherwise may have been the case,” ACCC Commissioner Sarah Court said in a statement.

“People often make purchasing decisions for accommodation based on the rankings and reviews they read on third-party sites like TripAdvisor. Manipulating these reviews is misleading to potential customers, who deserve the full picture when making a booking decision.”

She added, “This case sends a strong message that businesses can expect ACCC enforcement action if they’re caught manipulating feedback on third-party review websites.”

ACCC argued for penalties more than $3 million as the maximum penalty for the case was about $14 million. Meriton previously asked the court for a much lower penalty, about a couple of hundred thousand dollars.

The court also ruled that Meriton be restrained from “filtering, selecting or limiting” the guest email addresses it provides to TripAdvisor for the next three years.