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Commerce Commission v Bachcare Ltd [2020] NZDC 5128

Published 15 February 2022

Corrective orders — engaging in conduct that was liable to mislead the public as to the characteristic and/or suitability for a purpose of accommodation services — rating inflation — editing customer reviews — review policy — Fair Trading Act 1986, ss 1A, 11, 40(1) & 42 — Commerce Commission v Bachcare Ltd [2019] NZDC 25483 — Godfrey Hirst NZ Ltd v Cavaliar Bremworth Ltd [2014] NZCA 418 — Commerce Commission v Glaxosmithkline (NZ) Ltd HC Auckland CRI-2006-004-503913, 27 March 2007 — Commerce Commission v Telecom Mobile Ltd [2006] 1 NZLR 109 (CA) — Commerce Commission v Zenith Corporation Ltd (2006) 11 TCLR 794 — Australian Competition & Consumer Commission v On Clinic Australia Pty Ltd (1996) 18 ATPR 41-517 — Australian Competition & Consumer Commission v Aveling Homes Pty Ltd [2007] FCA 1470. The defendant had faced two representative charges of engaging in conduct that was liable to mislead the public as to the characteristic and/or suitability for a purpose of accommodation services. During a 16-month period, staff members working on the defendant's website had altered customer ratings and reviews to create an artificially positive impression of the defendant's customer feedback. The defendant had pleaded guilty to the charges and had been sentenced. The defendant's senior management and board of directors had been unaware of the offending; soon after becoming aware of it, the defendant had implemented a new review policy and had removed all the existing reviews and ratings from its website. The Commerce Commission argued that the ratings and reviews that the defendant had removed from its website may have been material to consumer decisions to rent a particular property. Further, the defendant did not disclose on its website the fact that it had removed all reviews predating the current review policy. Therefore the Commission argued that corrective orders should be displayed on the homepage of the defendant's website, outlining the fact that it had removed the old ratings and reviews, the Court's ruling, information on the current review policy, and an apology to its customers. The Commission argued that this would create an environment where the defendant's customers were protected, and would correct any false impressions created by the offending. The defendant opposed the application for corrective orders, arguing that they would have an inappropriately punitive effect. The Court found that the defendant's offending was not very extensive and any consequences for its customers would have been short-lived. The current review policy was now well-established. The Court considered that the corrective orders were not necessary, and declined the application. Judgment Date: 24 March 2020