It finds that businesses are writing or commissioning fake positive reviews about themselves to boost their ratings on review sites, which misleads consumers and undermines rivals.
Results from the consumer survey that the CMA commissioned suggest that 54% of UK adults read online reviews.
These sorts of practices may breach the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and the UK Advertising Codes and the CMA has heard of a number of practices that have the potential to breach consumer law.
The report notes information received from the British Hospitality Association (BHA), which in a recent survey of its members, found that 75% of respondents said they found user reviews to be ‘very useful’ or ‘quite useful to market and promote their business.
Jackie Grech, legal and policy director for the BHA said: "Online user reviews have fundamentally changed the way people find, search and book restaurant and travel. They are powerful influencers for customers' purchasing decisions, especially for hospitality purchases.
"Customers place increasing levels of trust in online user reviews, which makes them incredibly helpful when appropriately used but capable of really misleading consumers and harming business when misused or abused.
"We are pleased that the CMA has listened to the recommendations from our industry in their report and their recommendations going forward. We share a goal of ensuring our customers receive accurate, transparent and useful information about our businesses.
"We will continue to work closely with the online review platforms and government to promote practices that encourage reliable reviews and transparency in business rankings, ratings and search result order."
In response to the CMA’s report, the Association of Licensed Multiple Retailers (ALMR) has called for more transparency and the need for further action.
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.
“Our members have stressed to us what an important tool these websites can be, but they have also earmarked a number of areas in which they feel current provisions are lacking.
“Businesses are at risk from misleading reviews and we would like to see further procedures for detecting and removing unfair or malicious reviews put in place along with a formal resolution procedure for disputes and complaints.
“Customers are also at risk and measures to protect them, along with hospitality businesses, such as the identification of paid for listings and greater transparency regarding ratings systems are essential if we are to ensure fairness for users. The report noted that customer expectations are more likely to be exceeded so there is clearly some work to be done to in this regard.
“The ALMR has campaigned on this issue at a European level as the UK representative of HOTREC and we will work closely with the CMA as they progress with ICPEN (the International Consumer Protection and Enforcement Network) later this summer.”
The CMA will continue to investigate the areas of concern it has identified in this report and, where appropriate, will consider enforcement action to ensure businesses compete fairly in compliance with the law.