Can Flipkart, Snapdeal or Trip advisor be liable for misleading reviews?? Interesting Article on a recent case against Tripadvisor wherein the Court of Appeal overruled the Competition Authority fine of EUR 500,000

eCommerce sites NOT liable for reviews?

Jul 28, 2015

By Giulio Coraggio is a partner at world leading law firm DLA Piper specialized in technology, privacy and gaming/gambling law matters.

TripAdvisor did NOT mislead its users on the truthfulness of reviews published on its site, and the € 500K fine previously issued shall be cancelled.
Jack Ma, the founder and executive chairman of the Alibaba group, the world’s largest eCommerce site, made an interesting comment on the relevance of trust in eCommerce

Because of e-commerce, we finish 60-million transactions daily.  People don’t know each other. I don’t know you.  I send products to you.  You don’t know me.  You wire the money to me.  I don’t know you.  I give a package to a person.  I don’t know him.  He took something across the ocean – across the river.  This is the trust. We have at least, 60-million trusts happening every day.

And this case raises interesting questions on who is liable for the trust that consumers have on eCommerce platforms.

The dispute

TripAdvisor had been sanctioned by the Italian Competition Authority – AGCM (that has jurisdiction in Italy also on misleading adverting and unfair commercial practices) to the payment of a € 500,000 fine because its claims relating to the fact that the reviews on the site were true and reliable had been considered misleading.
However, the Court of Appeal of Lazio Region (the TAR) has completely overturned the position of the AGCM holding that TripAdvisor

1. never claimed that all the reviews on its site are true;
2. has put in place an adequate system to verify the truthfulness of reviews and only the results of such monitoring system impacts on the actual rankings; and
3. expressly declared of not being able to check the millions of reviews published on its site and that such reviews are mere opinions from users.

Based on the above the court reached the conclusion that consumers could not be harmed by means of TripAdvisor’s claims.

eCommerce is based on TRUST

There is no doubt that trust is the backbone of eCommerce.  The question is whether trust shall be the result of a monitoring activity performed by eCommerce operators or a natural consequence of the reputation achieved by the eCommerce operators as well as by the users of the eCommerce community contributing to that by means of their reviews.
The European regulator took a quite strict approach in 2000 with the approval of the eCommerce Directive which provided that

European Member States shall not impose a general obligation on providers [—] to monitor the informationwhich they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activity.

Such approach had been tested with different outcomes before Italian courts.  Indeed, during the last decade the scope of the liability exemption for hosting providers has been shrinking with courts forging the concept of the “active” hosting provider who is liable for any content published on its site.
However, following the decision of the European Court of Justice on the SABAM case,  the Court of Appeal of Milan completely overturned such position in a case involving Yahoo! holding that there is

1. no monitoring obligation,
2. no active hosting provider,
3. no take down obligation unless a detailed notice is submitted and
4. no filtering obligation for future contents.

What future for eCommerce reviews?

The decision of the TAR does not pertain on TripAdvisor’s obligation to monitor their users’ reviews, but on whether their claims as to the truthfulness of reviews were misleading.  But the issue is whether any eCommerce operator is obliged to put in place a sophisticated monitoring system of reviews such as TripAdvisor’s and whether, in absence of that, the provision of such functionality itself might be considered misleading.  The position of the TAR does not review the matter in details leaving it open to different interpretations.

Giulio Coraggio is a partner at world leading law firm DLA Piper specialized in technology, privacy and gaming/gambling law matters. You can contact him via email at giulio.coraggio@dlapiper.com or giulio.coraggio@gmail.com and follow me on Twitter at @GiulioCoraggio