The German Federal Court of Justice (BGH) recently clarified some of the requirements that the German Unfair Competition Act (UWG) imposes on the presentation of star ratings for businesses (file number: I ZR 143/23).

Relevance of online reviews

Online reviews are a powerful tool for businesses to attract and retain customers, as well as to boost their visibility and revenue on search engines. It is therefore not surprising that companies also advertise using their online reviews from customers. However, they also come with legal obligations and risks, especially when used for advertising purposes.

Recent decision

The case involved a real estate broker intermediary that advertised its services using average star ratings from customer reviews. The Centre for Protection against Unfair Competition, a regulatory body that monitors compliance with the UWG, challenged  as misleading, arguing that essential information such as the total number of customer reviews considered, the period of the customer reviews considered, and the breakdown of the customer reviews by star ratings were missing. The Federal Court of Justice (BGH) ruled that the breakdown of customer reviews by star ratings is not considered essential information according to § 5a UWG and therefore not mandatory. 

Information is not deemed essential merely because it may be important for the consumer's business decision. Rather, it must also be considered that the provision of the information can be expected from the consumer, taking into account the mutual interests, and that it carries significant weight for the consumer's decision. The breakdown by star ratings is a useful piece of information for consumers but not an essential one. While it certainly makes a difference whether a rating is composed of many very good and few bad reviews or vice versa, this information is not essential. The court assumes that it is clear to the consumer that an average rating is based on varying good and bad reviews.

Take away:

The presentation of reviews can be cautioned by Centre for Protection against Unfair Competition. This is a good reason for companies to check whether they are fulfilling their transparency and information obligations regarding their online reviews. 

The BGH decision can serve as an initial guide for this.

It must always be checked on a case-by-case basis what information they need to provide when presenting online reviews. For example, the UWG in § 5b para. 3 UWG sets forth specific information requirements for online reviews. Requirements also arise from other legal bases as well as from the case law of German Higher Regional Courts and the BGH.