The Federal Court of Australia (“Court”) on May 20, 2020, in the case of Australian Competition and Consumer Commission v. HealthEngine Pty Limited, NSD 1255 of 2019, found that HealthEngine Pty. Ltd. (“HealthEngine”), a health-tech company was in violation of various provisions of the Competition and Consumer Act, 2010 (“Australian Consumer Law” or “ACL”). The Court imposed pecuniary penalties along with various other directions in its order.
HealthEngine is the operator of Australia’s largest online health marketplace, hosting an online directory that lists over 70,000 health practice and practitioners across Australia (“Health Practices”) and serving as a booking facilitator between consumers and the Health Practices. HealthEngine operates primarily through a website and a phone application together (“Platform”), enabling patients to book consultations with Health Practices while also displaying published reviews and ratings to aid patients in identifying and choosing appropriate Health Practices.
The Commission and HealthEngine together filed joint submissions, including a statement of agreed facts and admissions (“Statement”). In this Statement, HealthEngine admitted to contravening various provisions of the ACL, which included engaging in conduct that was misleading or deceptive, or making false or misleading representations with regard to the services provided. The Court recognised that the Statement established the contraventions that were pressed, and divided the conduct of HealthEngine into 3 (three) categories:
Between March 31, 2015 and March 1, 2018, HealthEngine conducted a survey to ascertain whether a patient using their service would recommend a particular Health Practice to others. Patients who booked a consultation through the Platform could provide feedback or comments (“Review”). It was admitted that HealthEngine did not consider every Review it received through this mechanism, nor were the Reviews automatically published. It was further admitted that HealthEngine edited the feedback and comments not just to remove confidential information or typographical errors, but also to remove negative comments or change the meaning of these comments such that they were represented as more positive than originally intended.
From about March 31, 2016, HealthEngine began to send notification emails to patients whose Reviews had been published. These emails contained a hyperlink to the webpage where the Review was published. From November 2016, the notification email informed patients that the Review submitted may have been modified but failed to fully disclose how and to what extent HealthEngine modified the Review. HealthEngine accepted that Reviews published on the website were inaccurate, despite being represented as accurate.
For Health Practices that chose to participate, HealthEngine used the aforementioned survey to calculate a rating for services rendered to Patients. If 80% (eighty percent) or more patients answered “yes” to the rating question, HealthEngine published the rating initially as a percentage, and subsequently after March 2017 as a star rating. However, if less than 80% (eighty percent) of patients answered “yes” to the rating question, HealthEngine posted a notation on the Platform indicating that there was no rating for the Health Practice in question. HealthEngine claimed on the Platforms that it had insufficient data to calculate a patient satisfaction level.
HealthEngine accepted that despite it having received sufficient feedback to publish a rating for these Health Practices on the Platform, it chose not to do so and instead represented that insufficient feedback had been received. HealthEngine accepted that engaging in this conduct was likely to create a more positive or favourable impression towards its services in the minds of consumers who used the Platform to find a Health Practice.
From April 30, 2014 to June 30, 2018, HealthEngine made arrangements to refer patients to 9 (nine) different private health insurance brokers in return for a fee which it was collecting from the brokers. HealthEngine also collected non-clinical personal information from patients during the online booking process on the Platform by asking a series of questions such as whether the patient had private health insurance, whether they wished to receive a call on health insurance comparisons, and whether the patient needed their private health insurance needs assessed.
While answering these questions was not compulsory to make a booking using the Platform, if a patient agreed to “receiving a call on health insurance comparison”, HealthEngine automatically provided the patient’s non-clinical personal information to an insurance broker without the patient’s explicit consent. Neither did HealthEngine clarify that the patient’s non-clinical personal information would be sent to an insurance broker on answering “yes”, nor did it inform patients that a third party would provide these services. HealthEngine accepted that this conduct was likely to cause patients to believe that HealthEngine the provider of the relevant services, when it had in fact provided the non-clinical personal information of the relevant patients to a third party.
Penalties Imposed on HealthEngine:
Our Analysis: An Indian Perspective:
The Consumer Protection (E-Commerce) Rules, 2020 (“Rules”) notified on July 23, 2020 have endeavored to prevent similar unfair practices on e-commerce platforms in India. Rule 2(1)(d) clarifies that the Rules will apply to all forms of unfair trade practices across all models of e-commerce.
The Rules also elaborate on the duties of e-commerce entities. Under Rule 4(3) e-commerce entities are restrained from adopting any unfair trade practice, whether in the course of business on its platform or otherwise. Similarly, under Rule 6(1) a seller is restrained from engaging in unfair trade practices on e-commerce platforms.
The Rules specifically prohibit the tampering of customer reviews. Rule 6(2) and Rule 7(2) prohibit sellers on marketplace and inventory e-commerce entities from falsely representing themselves as consumers and posting reviews about goods or services, or misrepresenting the quality or the features of any goods or services. While the rules are silent on the manipulation of customer reviews by e-commerce entities as seen in the case of HealthEngine, we believe that it is within the scope of judicial interpretation for courts to extend protection afforded under the Rules to cover such malpractices, including deceptive practices such as the non-publication of negative reviews of a product or service on the platform or manipulation of seller ratings.
In addition, under Section 2(47) of the Consumer Protection Act, 2019 (“Act”), the disclosure of personal information of a consumer to a third-party amount to an unfair trade practice. Therefore, under the new consumer protection regime in India, conduct similar to that of HealthEngine would amount to a violation of various consumer rights, making it pertinent for businesses to ensure compliance with the Act, including the Rules.
Please find a copy of the judgment here.
This update has been contributed by Suchita Ambadipudi (Partner) and Sheetal Srikanth & Pranav Valiathan Pillai (Associates).
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