Many companies use customer reviews in their advertising to give potential customers an authentic impression of the satisfaction of previous buyers and to build trust. However, caution is required, as advertising with customer reviews is subject to certain legal principles. If essential information is missing or reviews are presented in a misleading way, this can violate competition law and therefore be considered illegal. In particular, the courts focus on misleading consumers by withholding relevant information, such as the total number or period of reviews collected.
In a recent ruling from July 25, 2024 (case no. I ZR 143/23), the Federal Court of Justice (BGH) clarified the requirements that companies must meet when using customer reviews in their advertising in order to avoid violating competition law. This decision creates more clarity and provides companies with guidelines on how they can use reviews in their advertising in a legally compliant manner without running the risk of a warning letter.
What is essential information?
According to Section 5a (1) UWG, anyone who misleads a consumer or other market participant by withholding material information which the consumer or other market participant needs in the circumstances to make an informed transactional decision and the withholding of which is likely to cause the consumer or other market participant to make a transactional decision that they would not otherwise have made is acting unfairly. Such material information may also include missing information in advertising, as this may give rise to misconceptions on the part of the consumer. However, not all useful information is also material information.
Requirements for advertising with customer reviews: BGH decision on admissibility
The BGH has ruled that companies may advertise with an average rating when “advertising with customer reviews” without specifying the total number of reviews or the review period. This applies in particular because consumers understand that reviews are subjective and an average can include both positive and negative opinions. Detailed disclosure is therefore not necessary in order to provide consumers with comprehensive information. The BGH clarified that withholding such details does not constitute a misleading act within the meaning of Section 5a UWG. Consumers know that an average star rating fluctuates and that individual negative ratings may be included. This case law creates legal certainty for companies as to how they can use ratings without infringing competition law.
Different standards for advertising with test seals
However, this case law should not be applied to advertising with test results or test seals. Consumers regularly have a great interest in finding out how the test result is composed and how the tested product compares with other products. In order to be able to evaluate the quality rating associated with a test seal, it must therefore be possible to verify the framework conditions and the content of the product test. The situation is different in the case of advertising with customer ratings: here the consumer knows that the ratings are based on subjective and inconsistent standards and that there are no specific evaluation criteria.
Legal consequences of misleading advertising with customer reviews
Companies that conceal essential information in their advertising with customer reviews expose themselves to legal risks. According to Section 5a UWG, it is unfair competition if consumers are misled by the withholding of relevant details – such as the total number of reviews or the review period. If a misleading presentation of customer reviews is found, warnings and legal proceedings can follow, which can result in considerable costs. It is therefore important for companies to comply with the legal requirements for “advertising with customer reviews” in order to avoid potential penalties and damage to their image.
Relevance of case law also for smaller platform operators
The BGH ruling on “advertising with customer reviews” not only affects large companies, but is also relevant for smaller platform operators who use reviews for their products or services. These include, for example, local service providers such as restaurants, hairdressing salons or craft businesses that present customer reviews on their websites or platforms such as Yelp or Google My Business. Operators of smaller online stores that are active on sales platforms such as Etsy, DaWanda or eBay also often rely on customer reviews to create trust and attract new customers.
It is important for these platform operators to know the limits of permissible advertising in order to avoid possible warnings. The BGH ruling provides clarity here, as it makes it clear that a general average rating is legally permissible without detailed information on the number of ratings and the time period. This also enables smaller providers to use their reviews effectively and legally securely without having to meet additional requirements.
