Auto Trader Group PLC (LSE:AUTO) shares fell 1.8% after the UK's competition watchdog announced formal investigations into five companies, including the car marketplace, over allegations of fake and misleading online reviews.
The Competition and Markets Authority (CMA) said it had launched probes into Autotrader, food delivery platform Just Eat, funeral services provider Dignity, customer feedback specialist Feefo and artisan pasta chain Pasta Evangelists, under consumer protection laws that came into force in April last year.
In Autotrader's case, the regulator is examining whether a number of one-star reviews, moderated by Feefo on behalf of the platform, were suppressed and excluded from star ratings shown to consumers.
Just Eat faces scrutiny over whether its ratings system inflated star scores for certain restaurants and grocers, while Dignity is being investigated over allegations that staff were asked to write positive reviews of its crematoria services.
Pasta Evangelists is accused of offering customers undisclosed discounts in exchange for five-star reviews on delivery apps.
Companies found to have broken consumer law face fines of up to 10% of their annual global revenues.
CMA chief executive Sarah Cardell said fake reviews undermine consumer trust at a time when household budgets are already under pressure, adding that the watchdog had given businesses time to put their houses in order and was now deploying its enforcement powers.
The investigations follow recent commitments secured from Google and Amazon to strengthen their systems for detecting and removing fraudulent reviews.