Violation of consumer rights on the internet

The US experience

In November 2024, a lawsuit was filed in the United States against the Sitejabber platform, which, using artificial intelligence, collects reviews and creates ratings of sellers. The idea of the platform is to post real customer reviews of goods, services and sellers so that other customers can be guided by such ratings and reviews if they decide to purchase these goods and services. It was revealed that 98% of customer reviews were collected by the platform by conducting instant surveys immediately after the purchase - before the customers had an opportunity to actually experience the purchased product, and only 1% of reviews came from customers who actually experienced the product.

It was clearly not disclosed to customers that the surveys were artificial reviews of sellers and generated their rankings on the Sitejabber platform. Through such surveys, Sitejabber artificially inflated the number of reviews and average ratings, misleading customers about the reliability of customer reviews.

Unlike Russia, the United States has the Consumer Review Fairness Act of 2016 (15 USC § 45b). The law prohibits restricting consumer's right to leave a review, including a negative one. And in October 2024, the Federal Trade Commission adopted the Rule Against Fake or False Consumer Reviews, including prohibitions on writing, selling, or buying fake or false consumer reviews that were created by a non-existent consumer, buying positive or negative reviews by a company, the prohibition of removal of negative reviews, and so on.

The EU experience

In November 2024, the European Commission and the Consumer Protection Cooperation Network initiated an investigation against Apple and Temu (a Chinese marketplace).

Apple is accused of illegally geo-blocking users of App Store, Music, Books, etc.:

1) The services have a different interface for different EU countries. The customer only gets access to the interface made for the country where they have registered their Apple account. It is difficult to change the interface when moving to another country.

2) For paid purchases, consumers are allowed to use means of payment (e.g., bank card) that are issued in the country where the Apple account is registered.

3) Due to different versions of the App Store in different countries, customers not allowed to download the apps offered in other countries, even if users are traveling or temporarily located in another country.

These actions violate the EU Geo- Blocking Regulation 2018/302, which establishes a prohibition on unjustified discrimination between EU customers on the basis of their nationality, residence, or place of establishment when they want to buy goods and services from a trader located in a different Member State. Apple has a month to clarify or remedy these violations.

Investigation against Temu involves the use of “dark practices”:

1) Creating the false impression that goods are offered at a discount, but in fact are not discounted.

2) Pressuring consumers to make purchases by falsely notifying them that the quantity or timeframe for purchasing a product is limited.

3) Forced gamification - forcing customers to play a game of “spin the fortune wheel” game to gain access to the marketplace, hiding important information about the terms of use of rewards in the game.

4) Displaying incomplete and incorrect information about customers’ legal rights to return goods and receive refunds.

5) Unclear information on how the authenticity of customer reviews on its website is ensured.

6) Temu's contact details are hidden customers cannot contact Temu if there are questions or complaints.

Temu also has a month to clarify or remedy violations.

South Korea Experience

In November 2024, the Commerce Commission launched 2 investigations against AliExpress and Temu. The first investigation concerned practices that violate competition and consumer laws:

- Platforms disclaimed any legal liability for damages of any kind arising from the transactions.

- Unlimited collection of user data: companies required consumers to provide access to the account and all data with the right to transfer it to affiliated companies. Users were encouraged to give up intellectual property rights protection for their user-generated content.

- Limiting consumers' ability to go to Korean courts - suggested disputes be heard in international courts.

- Platform has discretion in determining whether a user has violated the platform agreement - risk of unreasonable blocking.

- Injunction against lawsuits: users agree not to bring any action or lawsuit against platforms in connection with disclosures (e.g., in the event of information leaks).

The second investigation is related to the sale on Temu and AliExpress of unsafe consumer goods, including household appliances, electronics with high levels of lead, and cadmium. Another 359 items (56.9% of all items investigated) posed a risk of electric shock. As a result, the Trade Commission banned 1,915 dangerous goods from trading on AliExpress and Temu.

Russia

In Russia today there is no regulation of the practice of artificially inflating or falsifying customer reviews. There has been an attempt to introduce rules on the use of subscription traps.

From the monitoring issue No. 11, November 2024. Download the full issue (PDF) · issue page at the Gaidar Institute