Meriton Property Services has been fined $3 million for preventing customers from leaving potentially negative reviews on the online travel website TripAdvisor.

The Federal Court decided that Meriton — one of Australia's largest apartment developers and serviced apartment operators — had engaged in misleading and deceptive conduct between November 2014 and October 2015.

It also found that the company committed 13 breaches of the Australian Consumer Law, across 13 of its properties in New South Wales and Queensland.

"The maximum penalty that the judge could have imposed was about $14 million," Australian Competition and Consumer Commission (ACCC) commissioner Sarah Court said.

"We had submitted [arguments that] the penalty should be very much higher than $3 million. Meriton, conversely, submitted that it should be limited to a couple of hundred thousand dollars.

"We were arguing for a higher penalty, but we very much respect the decision that the court has made."

The court, presided over by Justice Mark Moshinsky, also ruled that Meriton be restrained from "filtering, selecting or limiting" the guest email addresses that it provides to TripAdvisor — the conduct which landed it in legal trouble.

However, this prohibition only applies for the next three years.

The court action was launched by the ACCC, following an ABC investigation into the matter in 2015.

'Masking' bad reviews

"Meriton's management directed staff to engage in 'masking' to stop potentially negative reviews from appearing on TripAdvisor," Ms Court said.

"This gave the impression Meriton accommodation was of a higher standard than otherwise may have been the case."

The process of "masking" involved Meriton's staff inserting additional letters ("MSA", which stands for Meriton Serviced Apartments) in front of certain guests' email addresses — particularly if they had complained, or were likely to leave a negative review online.

This led to TripAdvisor receiving incorrect guest email addresses — so its emails to customers, prompting them to leave reviews of the hotel, would bounce back.

At other times, Meriton did not provide guest email addresses to TripAdvisor at all, in order to avoid the potential negative reviews.

"People often make purchasing decisions for accommodation based on the rankings and reviews they read on third party sites like TripAdvisor," Ms Court said.

"Manipulating these reviews is misleading to potential customers, who deserve the full picture when making a booking decision."

The hotel group is owned by one of Australia's richest men Harry Triguboff.

It was also ordered to establish a compliance and education program for staff to adhere to provisions of the Australian Consumer Law.