Fake reviews and group buying under scrutiny

With more people using review sites for product advice, the Australian Competition and Consumer Commission is concerned they may be misled by fake reviews, chairman Rod Sims told Fairfax Media.

"Our concern is that people trust online websites more than they do company advertising or more than they do reading the newspaper. And yet if those things are not reliable . . . then that is both unfair to the consumer . . . and it is unfair to competitors."

The ACCC will next year investigate companies suspected of writing their own reviews or paying for positive reviews, Mr Sims confirmed in an interview this week.

Meanwhile, consumer groups are receiving up to 140 complaints a month about group buying sites such as Groupon, Cudo, Spreets and LivingSocial, making it an area of urgent concern.

"People are buying a voucher and the circumstances are such that they cannot actually redeem it and therefore they just lose their money," Mr Sims said.

"Many do get a discount, but some just lose their money.

"And that is unfair on the small-business person who either breaks his or her back to try and meet them or just suffers the reputational damage ."

The owner of a Sydney driving school told Fairfax Media his business was damaged by a group buying deal.

He made no profit and had to put his own customers aside while fulfilling vouchers.

"It is not worth it [because] I made no profit at all and the price they advertise my business is too cheap for me," the owner said.

"I cannot afford it [and] they take too much [commission]."

LivingSocial sold vouchers for Elite Driver Education for $49 and took a 40 per cent cut, leaving the owner with $29.40 for two lessons that normally cost $60 each. About 200 vouchers were sold and just over half were redeemed.

"People who bought the voucher did not ring until the end of the deal. They were calling too late and I was booked out," he said.

A spokeswoman for LivingSocial said it was up to businesses to capitalise on the vouchers as a "customer acquisition tool".