Small businesses owners have been advised to keep an eye on their online reviews, after a high-profile defamation suit between Gold Coast surgeons resulted in a $450,000 payout.
On Thursday, Federal Court Justice Jayne Jagot ruled plastic surgeon Dr Cesidio Colagrande was “traumatised” by a false online review, posted by commercial competitor Dr Min Sik Kim and his wife, Anna Min.
Justice Jagot found the December 2018 review was designed to imitate a former patient of Dr Colagrande, who previously falsely accused him of sexual assault.
“After what he did to me, I can’t believe he’s still practising,” the online post said, linking to a news report about Dr Colagrande’s 2017 conviction.
However, the conviction was overturned on appeal a year later, and the prosecution dropped its charges.
In writing the false review, Justice Jagot found the respondents “knew Dr Colagrande’s conviction had been set aside and calculated the best way in which to cause Dr Colagrande the most possible harm by inducing readers to believe that the sexual assault had occurred”.
The respondents were ordered to pay aggravated damages of $420,000, and special damages of $31,511, plus costs and interest.
The case highlights the way online reviews can act as a “double-edged sword” for small businesses, said Hamish McNair, a commercial litigator and defamation expert at Hall & Wilcox.
Speaking to SmartCompany, McNair outlined some key ways small businesses can respond to false reviews online, and steps they can take if false and defamatory claims remain on the internet.
Given the ability of online reviews to make or break a business’ online reputation, McNair said small enterprises should always keep a keen eye on review platforms like Google or Yelp.
“The best businesses who manage their reputation in this context are the ones who respond to reviews” whether they are positive or negative, he says.
“If there’s a greater investment of time in monitoring and responding reviews, it shows that the business is taking things seriously, and is looking to improve services to maintain a standard.
“Secondly, it enables businesses to cut things off at an early stage before they develop into something worse.”
In this way, small businesses can potentially resolve negative reviews and reverse a customer’s experience, instead of letting a poor rating linger online unchecked.
This includes false reviews, which can cause significant reputational damage if left online. Small businesses may choose to consider more significant legal interventions at that stage, where a simple check-in may have resolved the issue.
Once a business has identified a negative or false review, McNair said the next best step is to identify who posted it — even if reaching out feels difficult.
“If you can identify who it is, I think the most appropriate step is to contact them directly as they really can resolve it,” he said.
“And I think that’s a difficult step to take because most people want to avoid conflict. If someone’s said something adverse about you, in that context, they’re obviously not very happy with the service.
“It’s a difficult conversation to have but one that will ultimately save time and money in the long run.”
Companies like Google and Yelp have options for businesses that feel they have been unfairly maligned online, and often scrub reviews that contain offensive language levelled at small businesses.
Even so, McNair said it can be difficult to argue that a review is false or defamatory.
Another method small businesses can use to dampen the impact of a false review is to encourage customers with positive experiences to share their positions online.
It’s an “act of mitigating the harm has been caused by it,” McNair says.
“But unfortunately, it’s a very frustrating process because there’s no easy, quick solution.”
Businesses that are significantly concerned about a false review, and have the evidence and funding to challenge it, can consider using a legal firm to contact the review platform directly with a take-down request.
If reaching out to a platform fails, and if the reviewer remains anonymous, small businesses can consider preliminary discovery — a court application “premised on the basis you have a prima facie cause of action for defamation or another claim, you just don’t know who the proper respondent is”.
The next step is to issue a concerns notice to whoever published the false review, offering them another chance to apologise, retract, and otherwise delete their post.
“In our experience, I would say, around 40% or 50% of defamation claims are resolved followed the issuing of a concerns notice,” McNair says.
The process of pursuing defamation claims to judgment be costly and time-consuming, says McNair, all while the false review remains online.
But identifying the reviewer and addressing their concerns before taking further action can save businesses in court costs, which are likely to exceed expenditure on preliminary discovery and a concerns notices.
“Ultimately, those small businesses don’t necessarily have the resources to fight on with it,” McNair adds.
The final step is, of course, undertaking defamation action.
Small businesses with fewer than 10 employees classify as “excluded corporations” under state and federal law, meaning they can also launch defamation proceedings as an entity, instead of as an individual.
But “it would only be five or 10% of those claims which actually go all the way to judgment,” McNair explains.
“It’s really an area where settlement, negotiation of an agreed outcome, is far preferable to continuing down the route of defamation,” he said.
Defamation action can detract from a business’ day-to-day operations, and comes with a significant cost.
Of course, there is also the chance the person your business accuses of defamation has a valid legal defence: perhaps they can prove the claims were substantially true, or were an honest opinion rather than a statement of fact.
“There is really a need to weigh up the pros and cons of that,” McNair says.
All told, the best advice is to conduct your business legally and honestly, in a way that reduces the likelihood of poor reviews.
And when fake reviews do appear, it may be in your interest to independently seek a just outcome before launching pricey defamation action.
Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
