Australian firm Meriton fined $3M for misleading consumers on TripAdvisor

https://www.accc.gov.au/media-release/meriton-to-pay-3-million-for-misleading-consumers-on-tripadvisor

by markdown • 8 years ago

199 52 8 years ago

accc.gov.au

devoply• 8 years ago

$3M seems way excessive for a company that owns 15 properties. However it seems this is a big company: https://en.wikipedia.org/wiki/Meriton

markdown• 8 years ago

Meriton is Australia's largest apartment developer and also the country's biggest residential home builder founded by Harry Triguboff AO, its managing director, in 1963. Meriton sells apartments and also operates serviced apartments accommodation under its Meriton Suites brand in Sydney, Brisbane and the Gold Coast.
In 2007, it was estimated the company was building about 1,200 apartments each year. By 2010 this figure had increased to 2,000 units. It is estimated that over the past 50 years, Meriton has built more than 65,000 residential apartments on the east coast of Australia. It also offers serviced accommodation in 17 locations.
2014 was a record year for the apartment developer, with the company’s annual turnover rising more than 50 per cent to $2 billion

https://en.wikipedia.org/wiki/Meriton

broodbucket• 8 years ago

from Wikipedia:

2014 was a record year for the apartment developer, with the company’s annual turnover rising more than 50 per cent to $2 billion, bringing it to 11th place in IBISWorld's 2014 Top 500 Companies, up from 29th spot the previous year. The HIA-Colorbond steel Housing 100 named Meriton as Australia’s largest residential home builder, up more than 5000 housing starts, from 2573 in FY2013-14 to 7929. Based on this figure, new homes by Meriton accounted for around 10 per cent of all multi-unit dwellings commenced in Australia, and 29.5 per cent of all multi-unit dwellings commenced in New South Wales. Meriton projects equated to approximately 0.05 per cent of Australia’s GDP.

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...yeah I think they'll be fine.

ape4• 8 years ago

About US$2.2M, which is still a lot.

ShorsHammer2• 8 years ago

It's absolutely nothing for a company this size.

taspeotis• 8 years ago

15 properties isn't ... 15 houses ... here's one property https://www.meriton.com.au/wp-content/uploads/Meriton-Southp...

anoplus• 8 years ago

Just an idea. Why not penalize by percentage? If the goal of penalties is to prevent companies from breaking laws that are equally valid for everyone. Otherwise, companies holding most capital will be practically above the law.

conquistadog• 8 years ago

Right. Given their size, I'm not sure how painful this amount would be to the offender. Too low, and it's just a cost of doing business. A percentage penalty (of nationwide if not worldwide revenue) might prove much more concerning to them, much as we're seeing with general alarm caused by the fear of the GDPR's percentage penalty.

hayyyyydos• 8 years ago

Why not penalize by percentage?

The ACCC usually does do it this way.

Some recent examples: https://www.accc.gov.au/media-release/air-nz-penalised-15-mi... - Air NZ penalised $15m https://www.accc.gov.au/media-release/iphone-and-ipad-misrep... - Apple fined $9m https://www.accc.gov.au/media-release/domain-name-corp-and-d... - Domain Name Corp/Agency fined $1.95m

You'll see that most of these amounts are pretty close to the amount the companies made from the activities and scale with the size of their operations

RileyJames2• 8 years ago

The precedent this sets is interesting. From my interpretation, a business must request reviews from all customers, via all methods, for each platform, in order to not be considered ‘manipulating consumers’.

This will have impacts for all the saas review management products, as their key selling point is usually: get more reviews from your happy customers, or stop your unhappy customers posting reviews. Which is usually done by targeting or omitting either group.

Any Australian business using such product would now be on the hook.

tomglynch4• 8 years ago

I think it is just, if you are to request reviews, then you should request reviews equally from all customers.

paxy• 8 years ago

From my interpretation, a business must request reviews from all customers, via all methods, for each platform, in order to not be considered ‘manipulating consumers’

There is definitely room for broader enforcement of this judgement, but I don't think your interpretation is correct, especially the "via all methods, for each platform" part.

For this specific case, the practice of selectively sending email addresses for 'Review Express' is explicitly considered fraud under TripAdvisor's terms of service (scroll all the way down https://www.tripadvisor.com/TripAdvisorInsights/w789 and https://www.tripadvisorsupport.com/hc/en-us/articles/2006150...), so I imagine this made the court's decision easier.

hn_throwaway_99• 8 years ago

Yeah, I'm hoping there was just some info missing from the article, but this decision seems all sorts of fucked up.

All Trip Advisor Review Express really does automate the process of requesting reviews on Trip Advisor. It's not much harder to just email out requests to guests yourself. So is this decision saying if you only emailed requests to people who thought would give you a good review, but not a bad review, that you are guilty of something?

If so, literally 99% of businesses would be guilty of this. When someone calls to complain, every business tries to handle it in house. It's not like they say "Oh, I'm sorry you had a bad experience, let me get you the contact info for BBB so you can complain to them, and be sure to post a bad review on our Facebook page!"

What about all those apps that pop up a dialog that says "Do you love our app?" and if you say yes it takes you to the app store, and if you say no it shows an internal complaint dialog?

anilgulecha• 8 years ago

So is this decision saying if you only emailed requests to people who thought would give you a good review, but not a bad review, that you are guilty of something?

Yes, given that reviews are assumed-default to be unbiased by consumers, the above procedure leads to biased reviews. We'd all be better off if the above requirement were the default everywhere, to avoid this kind of review-hacking.

i_made_a_booboo• 8 years ago

The EU will go after this next. Technically it is a deceptive thing to do.

mikeash2• 8 years ago

I don’t see what’s so bad about this. Just because 99% of businesses do it doesn’t make it ok. Encouraging happy people to leave reviews and discouraging upset people means the reviews aren’t accurate, and you turn them from a useful tool for getting outside opinions into a marketing tool that just benefits businesses at the expense of their customers.

I don’t see this as being any different from, say, getting a passing inspection from the health department by manipulating them away from the room where you keep all the cockroaches and rat feces.

flashman• 8 years ago

I think you're right: Product Review is doing a nice line in politely blackmailing companies to pay for their product to avoid negative reviews on PR's site: "Resolve customer complaints before they are published. When your customers write a negative review, they will be presented with two options: to post it publicly or to resolve it privately."[1]

This case ought to give them a bit of a headache.

[1]https://www.productreview.com.au/brand-manager/

RileyJames2• 8 years ago

Exactly. I don’t see how that could not be considered manipulative.

Most other review product don’t have their own review website, but effectively do the same thing prior to posting to a public review platform (google business, trip advisor, etc). “Rate our product out of 10” where a result of 5 - 10 requests a review and below 5 leads to a “provide us some feedback”.

Either action independently is not manipulative (requesting feedback or requesting review) but the combination certainly seems to be.

elyobo• 8 years ago

Yeah, product review are funny. I published a bad review, and was offered money to take it down by the company (and I saw other reviews mention that it had happened to them for the same company). I mentioned it to Product Review and suggested that they look at reviews for that company to see if they'd had a disproportionate number of bad reviews removed and they said it all seemed fine to them...

spauka• 8 years ago

As other commenters have pointed out below, the issue the ACCC took was not that they didn't request reviews from all customers, but rather that they specifically and actively excluded people who they suspected might have had bad experiences from a program where otherwise all other customers were included.

From the ruling [0]:

On a weekly basis, Meriton provided TripAdvisor with the email addresses of guests who had stayed at its properties and TripAdvisor sent email invitations to these guests to post a review. However, rather than sending TripAdvisor the email addresses of all guests who had stayed at its properties (other than those who had requested that their details not be provided), Meriton adopted the following two practices:

(a) The first practice was to add the letters “MSA” (which stand for Meriton Serviced Apartments) to the front of the email addresses of certain guests. This rendered the email address invalid. This practice was applied to guests who had made a complaint or were otherwise considered likely to have had a negative experience at a Meriton property. I will refer to this practice as the MSA-masking practice.

(b) The second practice was to withhold from TripAdvisor the email addresses of all the guests who had stayed at a property during a period of time when there had been a major service disruption (such as the lifts not working, no hot water, etc). I will refer to this practice as the bulk withholding practice.

[0] http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2...

tomglynch4• 8 years ago

This is so interesting! There are so many apps that request reviews, I'm sure a lot only do it when the user seems happy to be using the app. Could they be fined?

I mean - it's good that they have been fined, but I'm concerned about the precedent it sets!

Another thought - how did ACCC find out about this? Someone internal reported it to them?

paulhart• 8 years ago

The judgement indicates that the issue here was that Meriton was actively preventing people from being asked for reviews in certain circumstances. Very different from someone being asked for a review and choosing not to give one.

tomglynch4• 8 years ago

What I am talking about is when an App will sometimes have a popup saying "Love this app? leave a review" with a link. Does this fall under the same issue if the app selectively chooses who to display this pop up to?

bigger_cheese• 8 years ago

Someone else linked the Federal court judgement (http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2...)

I had a skim through it. It quotes

"Section 18 of the Australian Consumer Law provides that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive."

From skimming the judgement looks like a whistleblower reported them to ABC (television station)

"In October 2015, an Australian Broadcasting Corporation program went to air that raised issues about Meriton’s practices in relation to TripAdvisor."

This is probably what led to the ACCC investigation

In the court judgement there are internal emails submitted as evidence between executives where they discuss "masking" practice etc.

The email evidence is what got them convicted I think it reads to me anyway as pretty irrefutable evidence - they discuss in detail what they were doing and how they were knowingly violating ToS of Trip Advisor.

ajdlinux• 8 years ago

The original judgment can be found at http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCA/2... (this doesn't include today's decision about the penalty)

ggm• 8 years ago

Meriton is run by Harry Triguboff who is one of a generation of migrant financiers, industrialists and corporate heads who defined postwar Australia. He has a pretty strong involvement in the Australian housing bubble and some people have said online he's propping up the price boom, as Chinese investors duck out of the market.

I've also read that he retains substantive control of the apartment complex body corporate, to milk it for post-construction fee income, which can be a long, long tail of money. And, he can stop the BC voting to reduce management fees, or stop it forcing the developer to fix post-construction minor slipups.

Intermernet• 8 years ago

As someone who has a few contacts in the high density housing market in Australia, I can say that I've heard similar rumours regarding Meriton. I've also heard horror stories about their actual construction quality and the expected life span of their apartments etc. Unfortunately, they don't seem to be doing anything illegal, so it's really up to the Australian public to push for stronger regulations regarding these practices, or just not buy into high density housing in most of Australia as it seems there has been a race to the bottom amongst Meriton and it's competitors.

caf• 8 years ago

At least in terms of the body corporate issue, the owners corporation does have a legal duty to act in the interests of all owners.

i3862• 8 years ago

I occasionally wish the ACCC had some more teeth but this is a good result. As a citizen, on the whole, I'm as proud of Australia's strong consumer protection laws as I am of our gun protection laws.

roganartu2• 8 years ago

The ACCC and strong consumer protection laws are something I didn't realise I took for granted until I moved to the US recently. I had a pair of pants develop a hole within a few weeks of purchase so I took them back to the store and it was difficult to convince them that pants should last longer than that and get a replacement. This is in contrast to my Fitbit, for example, which I had replaced about three times in two years without question in Australia because of a fault in the band.

It's interesting that capitalism comes into it somewhat, insofar as companies like Amazon and REI have consumer-friendly return policies as a sort of competitive advantage. I know I've bought things from REI despite a higher price just because I know I won't have any problems returning it for any reason within 12 months.

hmd_imputer6• 8 years ago

That is interesting. In my case, I have had the best consumer-friendly experience when it comes to returning or replacing items in the US. Returning electronics, clothes etc. to Wallmart, Target, BestBuy was totally hassle-free. When compared to Germany, the overall experience in the US is much better. Although Germans have "stronger" customer rights protection, in reality, you get less customer satisfaction. For example, a few days ago I purchased a pair of sunglasses from TKMaxx in Germany. After wearing it a couple of times, I realized that there are tiny scratches on them. I then took it back for a replacement. I was denied the replacement, because "the item didn't have the original price sticker on it". It was such a ridiculous excuse. I tear the price sticker the moment I buy the stuff. How am I supposed to test it to see if I like it without using it at all? There was another friend of mine who wanted to get a replacement for a malfunctioning smartphone he bought in MediaMarkt. He was also denied the replacement in the first place. After a long "negotiations" he was finally given a new smartphone, which, again, would not happen in the US at all. All in all, I find shopping experience in the US to be way better than in Europe.

dkarl• 8 years ago

American businesses love to bend over backwards for the customer but hate to admit that they owe you anything. If you ask for a replacement almost as if it's a favor, they find it flattering. If you say anything that implies you think they're obligated, they find it threatening, and it will take you much longer to walk out with a replacement (and a much less friendly send-off.)

zero_intp• 8 years ago

I used to work for Cogent Communications, this was common practice in customer service. Comstat scores are 100% gamed.

The Global Director of customer service has his managers change ticket parameters for two weeks around ticket closure so that only 'happy' customers get review emails.

Australian firm Meriton fined $3M for misleading consumers on TripAdvisor

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