Building a reputation for a product or service will often rely on the word-of-mouth of past customers, both at an informal level and through testimonials that small businesses record.
While these testimonials are a valuable way to demonstrate the success of a product, they can also lead to legal action, as was demonstrated earlier this year for a Queensland business.
The action related to an online automotive warranty company that was found to have been copying and pasting testimonials from a competitor's website. The company was fined $4,000 for publishing these testimonials as if they were sourced from its own clients.
As well as being fined, the company was required to enter into an enforceable undertaking that prevents it from using false or misleading testimonials in the future. Breaking this agreement is a legal offence which can lead to the Courts imposing further fines on a company.
This fine followed a period of intense scrutiny of online testimonials from fair trading organisations across the country. Of the 300 businesses that were audited, 43 were required to confirm the authenticity of their testimonials, with this case leading to subsequent fines.
More checks are expected in the coming months, which will make it more important for businesses to ensure their online activities are unique and could not be interpreted as deceptive.
Fair Trading Executive Director Brian Bauer emphasised that businesses will need to ensure their promotional activity remains compliant if they want to avoid fines in the future.
"The Australian Consumer Law makes it illegal to use a testimonial that is false or could mislead," said Mr Bauer.
"Consumers need to be able to trust the testimonials published, and be confident they are not reading marketing spin or a made up story."
For any organisation that wants advice on the compliance of their marketing or other promotional activities, it is important to consult a commercial lawyer. They will be able to advise on your rights and responsibilities when it comes to fair trading legislation.