The Competition and Markets Authority (CMA) has opened an investigation over concerns that "a number of large companies and media agencies" may be paying for 'advertorials' and sponsored content in blogs and other online articles without making it clear to consumers.
The move comes as part of a report into 'unlabelled paid endorsements' published by the CMA today. If the unnamed companies are found to have violated regulations that ban the practice, they could be hit with fines or other enforcement action.
Additionally, the CMA is assessing whether enforcement action is needed over both businesses and individuals writing or commissioning fake positive and fake negative reviews, as well as sites cherry-picking reviews without making it clear to readers they are doing so.
The authority says some review sites may not be publishing genuine negative reviews, whether intentionally or not.
It estimates that more than half of UK adults (54%) use online reviews on sites such as TripAdvisor, Amazon and Checkatrade before spending about £23 billion a year on reviewed products and services.
Its research also suggests that the reviews are highly influential in purchases, as they are trusted by about 80% of those who read them.
Most consumers, it says, use them to research one-off and big-ticket purchases or travel-related vendors such as hotels and restaurants, and the regulator notes that most are happy with their decision.
MoneySavingExpert.com was one of the organisations that gave feedback about online reviews following the CMA's initial call for information in February.
A matter of 'consumer trust'
Nisha Arora, CMA senior consumer director, says: "Millions of people look at online reviews and endorsements before making decisions such as where to stay on holiday or which plumber to use.
"We have found that consumers who use online reviews and endorsements find them valuable, but we have also heard about some practices that may be unlawful."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."