What you need to know
- After ruling in November 2017 that Meriton Property Services Pty Ltd had contravened the Australian Consumer Law (ACL), Justice Moshinsky has ordered Meriton pay a penalty of $3 million.
- Justice Moshinsky also ordered that staff of the hotel chain undertake a three-year Competition and Consumer Law Compliance Program, and restrained the company from filtering, selecting or limiting the guest email addresses for the TripAdvisor Review Express service for the same period.
Refresher: Meriton tripped up on TripAdvisor
As we outlined in the March 2018 edition of IP @ Ashurst, Meriton Property Services was found to have breached sections 18 and 34 of the Australian Consumer Law (ACL) by manipulating which guests received an invitation to review a Meriton serviced apartment through TripAdvisor's Review Express service after their stay.
Meriton staff were instructed to invalidate the emails of any guests who had made a complaint, had a negative experience, or suffered a service disruption during their stay.
Justice Moshinsky concluded that Meriton's suppression of probable negative reviews improved the ratio of favourable to unfavourable reviews for Meriton properties on TripAdvisor, and in some cases improved the ranking of Meriton properties compared to nearby accommodation options.
The practice also meant that prospective guests did not receive an accurate impression of how often Meriton properties experienced service disruptions.
What was the judge's reasoning?
Pecuniary penalty
The main issue of dispute at this hearing was the size of the penalty to be paid by Meriton. Justice Moshinsky took into account a number of factors in finding that a penalty of $3 million was appropriate.
His Honour determined that the maximum penalty of $1.1 million per offence should be available for each of Meriton's 13 properties, because the manipulation affected each property's ratio and accuracy of reviews separately. The maximum penalty was therefore set at $14.3 million.
Justice Moshinksy then considered the following factors in reaching his decision:
- Deterrence: his Honour noted the considerable public interest in corporations observing the requirements of the ACL, and the primary purpose of civil penalties to deter companies from contravening the ACL or treating penalties as "an acceptable cost of doing business";
- Capacity to pay: although his Honour accepted that "a company's financial resources alone do not justify a higher penalty than might otherwise be imposed", he considered the scale of Meriton's business such that a large penalty was required to ensure specific deterrence and signal to the public the seriousness of contravening the ACL;
- Impact on consumers: his Honour took into account TripAdvisor's size and reach when considering the number of consumers and other businesses affected by Meriton's conduct;
- Culture of non-compliance: his Honour found that the misleading and deceptive practices were engaged in deliberately, systematically, and with the knowledge and sanction of senior management. Justice Moshinksy also concluded that Meriton staff were inadequately trained in consumer law compliance, and that the company's attempts at co-operation were undercut by misleadingly failing to disclose its suspension from TripAdvisor. However, his Honour did note as a substantial mitigating factor that Meriton had not previously been found to have contravened the ACL;
- Loss and damage: although the ACCC did not produce any evidence of actual loss or damage, Justice Moshinsky accepted that evidence of loss or damage to consumers or Meriton's competitors would nevertheless arise as a result of lost opportunity: consumers had lost the opportunity to accurately compare accommodation services, and competitors had lost the opportunity (while complying with the law) to receive their fair share of business;
- "Course of conduct": his Honour found that all of the contraventions arose from a single corporate policy relating to the Review Express system, which was implemented by the adoption of two practices: MSA masking and bulk withholding, which both had the effect of reducing the number of negative reviews of Meriton properties. This meant that a single penalty, rather than a concurrent penalty, was appropriate.
Other orders
Along with the pecuniary penalty, Justice Moshinsky ordered:
- a three-year injunction preventing Meriton from filtering, selecting or limiting the guest email addresses it supplies to TripAdvisor’s Review Express service, unless a guest consents or doing so accords with TripAdvisor’s rules or guidelines for submitting email addresses to Review Express; and
- Meriton staff to take part in a three-year Competition and Consumer Law Compliance Program, including developing policies on consumer law compliance, complaints handling, whistleblower protection, and compliance reporting.
The ACCC also sought an order that Meriton publish a correction both in hard copy at the receptions of their serviced apartments, and as a pop up on Meriton's home page.
However, due to the time that had elapsed and the fact that the offending conduct had occurred on the TripAdvisor website rather than Meriton's own site, Justice Moshinsky declined to make such an order.
Authors: Lisa Ritson, Partner; and Daniel Barnett, Graduate
