New law prevents firms from punishing consumers for bad reviews

A new law will help prevent businesses from punishing consumers who post negative reviews.

The Consumer Review Fairness Act prohibits companies from adding so-called “gag clauses” into certain contracts that would restrict a consumer’s ability to criticize the business or penalize them for doing so.

Instead of such clauses, businesses should focus on improving the customer experience to generate more positive reviews, experts say.

“Consumer reviews are helping improve our marketplace,” says Eric Goldman, a professor at Santa Clara University School of Law and co-director of its High Tech Law Institute. “This law makes sure the consumer reviews we find so helpful are going to keep coming.”

The measure, which was signed into law by President Barack Obama and takes effect March 14, prevents the use of “non-disparagement” clauses in form contracts, specifically those generic, standardized contracts where there’s no real opportunity to negotiate terms, Goldman says.

Think, for instance, of a website, when you check off a box that says, “I accept these terms.”

While these types of clauses weren’t overly prevalent, they were being utilized by some businesses, Goldman says.

One case made headlines last year, in which a Texas couple was sued by a pet-sitting company for reportedly posting a poor review on Yelp.

“We were seeing the top of a cresting wave,” Goldman says, noting he feared that as more businesses incorporated anti-review clauses, others might follow.

“It was a very abusive tactic,” says Mark Grabowski, an internet law professor at Adelphi University in Garden City.

In some cases, businesses would add such clauses in the fine print of contracts, hiding them in the terms of service, and would even go as far as suing the customer for a negative review, claiming it was defamation, he says.

But defamation is hard to prove, Grabowski says. It has to be “a provably false fact that seriously damages someone’s reputation,” he says. For example, someone’s opinion about a bad experience at a restaurant may hurt business, but isn’t a provably false fact, he says.

Still, the new law doesn’t give consumers “license to make false allegations or breach confidentiality obligations,” says Richard B. Newman, an advertising law and regulatory compliance attorney at Manhattan-based Hinch Newman LLP.

In addition, it doesn’t prohibit a business from suing for defamation or libel in the case of false or fake reviews.

But winning such cases isn’t easy and may not be worth the cost and bad publicity.

Businesses should “assess negative content in terms of facts v. opinion,” says Newman. In some cases, a business should “consider contacting the platform host,” he says; some websites are more willing than others to remove posts that violate internal terms of use.

“There may be various avenues of recourse if the post contains trade secrets, logos or other proprietary graphical content owned by the business,” he says.

But otherwise, the best way to handle negative reviews is “good, old-fashioned public relations and diplomacy,” says Grabowski.

It’s unrealistic to think that a company won’t get any negative reviews, says Kevin Lee, executive chairman of Didit, a Mineola digital marketing firm.

But the firm’s focus should be on generating as many positive reviews and positive content to balance it out, he says.

Many complaint boards allow a business owner to respond to a negative comment and they should, he says. But keep it short and simple, and provide the person making the complaint with a call to action, such as “please contact us to discuss the matter further.”

While this legislation is a win for consumers, they still need to post reviews responsibly.

“Consumers have to keep in mind, it’s not a license to just go and say anything,” says Grabowski. “The consumer’s reputation is also on the line.”