For many buyers, customer reviews are key to their buying decision. But what if reviews on a platform are incorrect? Does this mean that the merchant is potentially liable for unfair competition? Not as a general rule, says the German Federal High Court of Justice [Bundesgerichtshof – BGH].
A merchant offered a product commonly known as Kinesio tape for sale on Amazon. Kinesio tape is an elastic adhesive tape said to have pain-relieving or healing effects. However, there is no evidence of any medical effect. Nevertheless, some customer reviews below the offer emphasised effects of precisely this nature in a positive way. A merchant has no control over reviews on Amazon. A private competition association demanded that the merchant cease and desist from disseminating the information included in the reviews because it constituted misleading advertising. After the merchant had made unsuccessful attempts to have the reviews removed by Amazon, the competition association filed suit, arguing – among other things – that the merchant had adopted the customer reviews as its own.
Following previous judgments of the lower court instances against the competition association, the German Federal High Court of Justice dismissed its appeal, too, finding that, although the information contained in the reviews was misleading pursuant to Sec. 11 Para. 1 Sentence 1 No. 11, Sentence 2 of the German Act on Advertising in the Healthcare System [Heilmittelwerbegesetz – HWG] and Sec. 5 Para. 1 No. 1 of the German Act Against Unfair Competition [Gesetz gegen den unlauteren Wettbewerb – UWG] because there was no evidence of medical benefits, this still did not represent unfair competition.
Neither did the merchant use the customer reviews for advertising, nor could they be imputed to the merchant as advertising of its own. It was objectively clear that the merchant was not responsible for the content of customer reviews. The merchant did not purport to endorse or support any customer reviews either. This assessment by the Court was based on the one hand on the fact that the reviews were visually clearly distinct from the offer, and on the other that the merchant had no control over customer reviews, not even if they were negative. The very fact that the reviews are independent of the offer is the essence of the review system and the reason why buyers are interested in reviews.
Moreover, the Federal High Court of Justice established that the merchant had no obligation to protect buyers from being misled by customer reviews. Whether such an obligation exists had to be determined taking account of the particular circumstances of each individual case. An argument against this was that customer reviews are socially desired in online trading as a source of information and are capable of supporting effective competition. In its balancing exercise, the Federal High Court paid particular regard to the protection customer reviews enjoy under the German constitution because they are covered by the freedom of opinion and information pursuant to Article 5 Para. 1 Sentence 1 of the German Constitution [Grundgesetz – GG]. Although the public interest to protect public health could be weighed against the freedom of opinion and information and could justify a restriction of these basic rights, there is no indication that the Kinesio tape offered poses any risk.
Recent case law has considered a number of issues involving customer reviews on the Internet in different scenarios. The decision of the present case relieves merchants on platforms such as Amazon of a burden. As a rule, they are not responsible under competition law for customer reviews on trading platforms and have no obligation to prevent misleading information from being disseminated by customers. This case shows that this would also be difficult to implement in practice in dealings with major platform operators, especially given that the Federal High Court of Justice emphasised the constitutional law aspect of customer reviews. However, merchants do face a risk of warning letters against them being successful if the boundaries between the offer of a merchant and a customer review blur. This is likely the case, for example, if selected reviews are incorporated into the offer. Particular caution is also recommended if a merchant website has a customer review system of its own. In this case, the merchant usually does have control over the reviews that appear on its website because it can choose which reviews to publish, or at least to no longer offer a review system.
(German Federal High Court of Justice, judgment of 20 February 2020 – I ZR 193/18)