The Importance of Customer Reviews in E-commerce & Online Businesses

/Published:23rd June 2026/inEcommerce, Marketing
Accounting Wise - the importance of customer reviews in e-commerce

Get 50% off our services for the first 6 months when you sign up to one of our Pre-Built or Bespoke Packages!

For anyone selling online in the UK, customer reviews are no longer a nice-to-have. They shape what buyers click, what they trust, and ultimately what they purchase. Research cited by the Competition and Markets Authority suggests that as much as £23 billion of UK consumer spending each year is influenced by online reviews, and a study by Which? found that 89% of people consult reviews when researching a product or service. If you run an e-commerce business, those numbers translate directly into revenue, conversion rates, and the long-term health of your brand.

This post looks at why reviews matter so much, how they affect your commercial performance, and the legal obligations every UK seller now carries following the fake reviews ban introduced under the Digital Markets, Competition and Consumers Act 2024. It also covers the often overlooked accounting and tax implications, from VAT treatment of incentives to keeping clean records for HMRC.

Whether you sell through your own Shopify or WooCommerce store, an Amazon storefront, eBay, or Etsy, this article is for you: sole traders, limited company directors, and anyone responsible for marketing, compliance, or finance in an online retail operation.

Why customer reviews matter in e-commerce

Reviews do several jobs at once. They reassure hesitant buyers, improve your visibility in search results, and give you a steady stream of feedback you can act on. Unlike paid advertising, genuine reviews are credible precisely because they come from real customers rather than from you.

Here is what well-managed reviews deliver for an online business:

  • Higher conversion rates. Shoppers who cannot touch or try a product rely on the experience of others. A product page with a solid body of honest reviews typically converts far better than one with none.
  • Improved search visibility. Review content adds fresh, keyword-rich text to product pages, and star ratings can appear as rich snippets in Google results, increasing click-through rates.
  • Stronger trust signals. A visible mix of reviews, including the occasional critical one handled well, signals authenticity. A wall of flawless five-star ratings often does the opposite.
  • Actionable product and service feedback. Recurring complaints about sizing, delivery, or packaging are free market research you can use to reduce returns and improve margins.
  • Customer retention. Responding thoughtfully to reviews, positive and negative, shows you are listening and encourages repeat custom.

The legal framework: the fake reviews ban

This is the area most UK e-commerce owners underestimate. On 6 April 2025, new prohibitions on fake and misleading reviews came into force under the Digital Markets, Competition and Consumers Act 2024 (the DMCC Act). These rules are now firmly in effect and the CMA is actively enforcing them.

Several review-related practices are now classed as banned commercial practices, meaning they are automatically treated as unfair and unlawful without the regulator having to prove they influenced a buyer’s decision. The banned practices include:

  • Writing, submitting, or commissioning fake reviews. This covers paying a third party to post positive reviews of your products, or negative reviews of a competitor.
  • Publishing reviews without taking reasonable steps to check they are genuine.
  • Concealed incentivised reviews. Offering a discount, free product, loyalty points, or payment in exchange for a review is not banned outright, but failing to clearly disclose that incentive is.
  • Misleading presentation of reviews. Hiding or suppressing negative reviews, or displaying star ratings that paint an inaccurate overall picture, is prohibited.

Crucially, the Act creates a positive duty. If you publish or provide access to consumer reviews on your own site, you are a “publisher” in the eyes of the law and must take reasonable and proportionate steps to prevent and remove fake or concealed incentivised reviews. What counts as reasonable scales with the size and risk profile of your business. A large marketplace such as Amazon faces far heavier expectations than a small independent store, but no seller is exempt from the principle.

The CMA can decide that consumer law has been broken without going through the courts and can impose fines of up to 10% of a business’s global annual turnover. For breaches of formal undertakings, fines of up to 5% of turnover apply, with additional daily penalties for continued non-compliance.

The regulator has already moved from education to action. After a three-month grace period that ended in mid-2025, the CMA began investigating businesses and has opened formal cases across sectors including funerals, food delivery, and car sales. You can read the official position in the CMA’s guidance, Fake Reviews: CMA208 guidance for businesses, and stay current via the CMA on GOV.UK.

Who this applies to

If your online store displays customer reviews, collects them, or uses them in marketing, these rules apply to you. That includes sole traders running a single product line, limited companies operating multi-channel stores, and businesses using third-party review platforms such as Trustpilot, Feefo, or Google. Using an external platform does not transfer your responsibility for how reviews appear on your own pages or in your advertising.

Dedicated accounting for UK eCommerce businesses

 eCommerce Accountants UK

Categories:

Get 50% off our services for the first 6 months when you sign up to one of our Pre-Built or Bespoke Packages!

Speak to an accounting expert

If you’re unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.

0330 113 8442 Request Call Back

How to manage reviews lawfully and effectively

Compliance and good commercial practice point in the same direction here. The following steps keep you on the right side of the law while building a review profile that genuinely earns trust.

  1. Write a clear reviews policy. Document how you collect reviews, how you handle incentivised ones, and how you detect and remove fake content. The CMA has indicated that simply having no policy is a red flag.
  2. Disclose every incentive plainly. If a review was left after a discount, free sample, or prize draw entry, label it clearly, for example “Incentivised review” or “Review from a verified purchase who received a discount.” Hidden incentives are the most common compliance failure.
  3. Never suppress negative reviews selectively. Publish genuine critical feedback and respond to it professionally. Removing only the bad reviews is a banned practice.
  4. Verify purchases where you can. Closed review systems that only allow confirmed buyers to leave feedback reduce your risk and improve credibility.
  5. Run regular checks. Conduct periodic sweeps for suspicious patterns, such as bursts of identical five-star reviews, and keep a record of what you found and what you did.
  6. Respond to all feedback. A measured, courteous reply to a complaint protects your reputation and demonstrates active management to both customers and the regulator.

The accounting and tax angle

Reviews sit closer to your bookkeeping than many owners realise. Once you start incentivising feedback, you create transactions that need to be recorded and treated correctly.

  • Free products and samples given for reviews. If you give goods away in exchange for a review, the cost still flows through your accounts as a business expense, and there may be VAT consequences. Under VAT rules, business gifts can trigger an output VAT charge once their value exceeds the annual threshold per recipient. Check the current position in HMRC’s guidance on business promotions and VAT (Notice 700/7).
  • Discounts and loyalty points. Reductions offered for reviews affect the consideration on which VAT is calculated and should be reflected accurately in your sales records.
  • Payments to influencers or reviewers. Fees paid for endorsements are deductible business expenses if incurred wholly and exclusively for the trade, but you must keep invoices and consider whether the recipient’s tax status creates any reporting obligation.
  • Record keeping. HMRC requires businesses to keep accurate records of income and expenditure. If you operate Making Tax Digital for VAT, your incentive spending and any associated VAT must be captured in your digital records. See GOV.UK guidance on VAT record keeping.

For limited companies, remember that marketing and review-generation costs are ordinary trading expenses that reduce your profit for Corporation Tax purposes, provided they are genuinely incurred for the business. Keeping these costs clearly categorised in your bookkeeping makes year-end accounts and your filings with both HMRC and Companies House far smoother.

Turning reviews into a commercial advantage

Beyond compliance, a deliberate review strategy is one of the highest-return activities in e-commerce. Practical tactics that work well for UK sellers include:

  • Sending a polite, automated follow-up email a sensible number of days after delivery, timed so the customer has actually used the product.
  • Making the review process effortless, ideally one or two clicks from a mobile device.
  • Displaying reviews prominently on product pages, including verified-purchase badges where available.
  • Featuring genuine reviews in your marketing, while ensuring any incentivised feedback used in ads is clearly labelled.
  • Using negative feedback constructively, for example adjusting product descriptions to reduce mismatched expectations and lower return rates.

Final thoughts on the impact of Reviews for your online business.

Customer reviews are among the most powerful assets an online business holds. They build trust, drive conversions, and improve your visibility, but only when they are genuine and managed properly. Since April 2025, the legal stakes have risen sharply: fake, concealed, or misleadingly presented reviews are banned, and the CMA can impose fines of up to 10% of global turnover.

The good news is that lawful practice and good business align neatly. Be transparent about incentives, publish honest feedback, respond professionally, and keep clean records of any associated spending. Do that, and your reviews will work for you in the search rankings, on your product pages, and in your accounts.

If you would like help making sure your review incentives, VAT treatment, and record keeping are set up correctly, our team can support you. Request a Call Back with Accounting Wise to get your e-commerce finances on solid ground.

Need help with your accounts as e-Commerce Business Owner? Contact Accounting Wise Today!

Build Your Own Package Accounting Packages One Off Pricing

Customer Reviews for E-Commerce Businesses FAQ

0330 113 8442 Request Call Back

Yes, incentivising reviews is not banned outright. What is banned is failing to disclose the incentive clearly. Any review left in exchange for a discount, free product, or other benefit must be openly labelled as incentivised.

You can remove reviews that are fake, abusive, or breach your platform’s terms. You cannot selectively suppress genuine negative reviews to make your ratings look better, as misleading presentation of review information is a banned practice under the DMCC Act.

Yes. You remain responsible for how reviews are displayed on your own site and used in your marketing. Relying on a third-party platform does not remove your obligations as a trader.

Keep evidence of any spending on review generation, including invoices for influencer fees, the cost of free products given away, and details of discounts offered. These feed into your VAT records and your profit calculation for Income Tax or Corporation Tax.

Glossary of Key Terms

DMCC Act – The Digital Markets, Competition and Consumers Act 2024, the UK legislation that, from 6 April 2025, bans fake and concealed incentivised reviews.
CMA – The Competition and Markets Authority, the UK regulator responsible for enforcing the fake reviews rules and able to impose fines without going to court.
Fake Review – A review that does not reflect a genuine consumer experience, including reviews written, bought, or commissioned to boost your own products or damage a competitor.
Incentivised Review – A review left in exchange for a benefit such as a discount, free product, loyalty points, or payment. Incentives are allowed, but only if clearly disclosed.
Concealed Incentivised Review – An incentivised review where the incentive is not disclosed. This is a banned practice under the DMCC Act.
Banned Commercial Practice – A practice automatically treated as unfair and unlawful, where the regulator does not need to prove it influenced a buyer's decision.
Publisher – Under the DMCC Act, anyone who publishes or provides access to consumer reviews, including businesses that display reviews on their own website.
Positive Duty – The legal obligation on publishers to take reasonable and proportionate steps to prevent and remove fake or concealed incentivised reviews.
Reasonable and Proportionate Steps – The compliance measures expected of a business, scaled to its size and risk profile. Larger platforms are expected to do more than small independent stores.
Verified Purchase – A review confirmed to come from a genuine buyer of the product, used to reduce the risk of fake reviews and improve credibility.
Closed Review System – A review setup where only confirmed buyers or users of a product can leave feedback.
Rich Snippet – Enhanced search results, such as star ratings shown beneath a listing in Google, which can improve click-through rates.
Output VAT – The VAT a business charges on its sales, which can also apply to business gifts such as free products given for reviews once their value exceeds the annual threshold per recipient.
Business Gift – Goods given away for business purposes, for example a free product provided in exchange for a review, which may carry VAT consequences.
Allowable Expense – A cost incurred wholly and exclusively for the business, such as influencer fees or review-generation tools, which reduces taxable profit.
MTD (Making Tax Digital) – An HMRC initiative requiring businesses to keep digital tax records and submit VAT returns using compatible software.
HMRC – His Majesty's Revenue and Customs, the UK government body responsible for collecting taxes.

Newsletter Subscription - Accounting Wise

Join Our Newsletter!

Get expert accounting tips, tax updates, and business insights straight to your inbox. Sign up today and stay one step ahead!

Newsletter Signup

Hot Topics

More related Accounting Community, News & Resources

Accounting Wise - key accounting dates july 2026

Key Accounting Dates July 2026

July is one of the busiest months in the tax calendar, with employer reporting deadlines clustered around the 6th, mid-month PAYE and CIS payments, and the Self Assessment second payment on account at the end. Here is a quick look at key dates for July 2026.
Accounting Wise - How to Use Social Media to Market Yourself as a UK Freelancer

How to Use Social Media to Market Yourself as a UK Freelancer

Social media is one of the most cost-effective ways for UK freelancers to find clients and build a reputation. This guide covers the right platforms, content that attracts work, and the HMRC rules every self-employed person needs to know.
Accounting Wise - can i be VAT registered as a sole trader

Can I Be VAT Registered as a Sole Trader?

Can sole traders register for VAT? Yes, and beyond a turnover of £90,000 it becomes compulsory. This post looks at the rolling 12-month threshold, the two tests HMRC uses, when voluntary registration makes sense, your ongoing obligations, and the penalties for registering late.
Online Company Formation Experts - Formations Wise
Right Right Company Formation

Company Formation

Free company formation with our Pre-Built or Bespoke Accounting packages!

All Official Documents

Manage Your Company Online

London Registered Office Address

Your own limited company

Accounting Software

Whatever your size, our accounting software supports your business.

Quotes & Payment Reminders

MTD VAT & CIS Returns

Payroll Services & HR Support

Unlimited Support & Advice

Balance Accounting Software - The Balance App
Right Right Accounting Software
Rated Excellent on Trust Pilot - Accounting Wise Logo

Get started with the right accounting solution for your business

Build Your Own PackageAccounting PackagesOne Off Pricing

Contact Us

Interested in Accounting Wise?

Request Call Back0330 113 8442

Accounting Wise is a trading style of Accounting Wise Ltd, a limited company registered in England under company number 09365202. Our registered office is: The Carriages, Station Road, Ware, SG12 9PL UK.

Content is for general information only. Always take advice.

Key Accounting Dates July 2026Accounting Wise - key accounting dates july 2026