The Competition and Markets Authority (CMA) report outlined concerns about the impact of fake reviews and cases of fair negative reviews not being published.
Following the report it has launched an investigation into businesses paying for endorsements online without making it clear to readers.
In reaction to the report, the Association of Licensed Multiple Retailers (ALMR) has stressed the importance of transparency and the need for action to be taken to protect businesses from malicious or misleading reviews.
ALMR chief executive Kate Nicholls said: “The CMA’s report underlines what an important, resourceful and influential tool online review websites can be for the tourism industry.
“Online review websites operate on the basis of appearing to be objective, but the report has highlighted the confusion and damage that can be caused by fake, malicious or misleading reviews.”
The report also found online reviews to be useful, with 54% of adults using them before making purchases, and most buyers finding that the product or service matched expectations.
ALMR members have stressed that though review websites are an important tool, provisions are lacking. They want to see procedures for detecting and removing unfair or malicious reviews, and a formal procedure for disputes and complaints.
The CMA has produced information for businesses explaining what they need to do to help them comply with the law, and a detailed report on its findings.
Nisha Arora, CMA senior director, said: “We are committed to ensuring that consumers’ trust in these important information tools is maintained, and will take enforcement action where necessary to tackle unlawful practices.”
The report found that online reviews enable customers to make faster and more confident decisions, and easier for small businesses and new entrants to enter a market or to expand.
It estimates that £23 billion a year of UK consumer spending is potentially influenced by online reviews.
Jo Causon, chief executive at the Institute of Customer Service, said: “In an age where consumers have many sources of information and greater choice before they buy, organisations would do well to remember that it is becoming easier to check one against another.
“The speed of information gathering and communication gives customers a huge amount of insight, so they are relying more on peer-to-peer validation to help them make up their minds.”
The report stated that businesses have given fake positive reviews about themselves and negative reviews about each other. CMA advises against this, and for businesses to ensure that advertising and paid promotions are clearly identifiable to readers as paid-for content.
Causon warns that not doing so could lead to customers’ trust being eroded. She said success must be built on authenticity and transparency.
CMA advises websites should be clear about where reviews come from and how they are checked before publishing.
All reviews should be published, including negatives ones.
There should be no long delay before reviews are published so consumers get the current picture.