The use of online social business review sites, such as Yelp, Foursquare, Urbanspoon/Zomato, TripAdvisor, and many others, has grown significantly over the past few years. As of 2016, Yelp had 135 million monthly visitors and 95 million reviews; Yelp first became a profitable company in 2014. While social review platforms provide great advertisement and help build positive rapport for newer businesses, businesses face risks of negative reviews harming their reputation and steering customers elsewhere. Some businesses have responded to those risks by making their customers sign “gag orders,” form contracts that either prohibit them from reviewing the business on these review platforms or include non-disparagement clauses. Non-disparagement clauses bar a party from publicly disparaging the other party, such as either leaving a negative review on a social review website or speaking poorly about a former employer. Federal courts have scrutinized similar non-disparagement clauses that bar former employees from publicly speaking poorly about an employer in employment contracts.

In 2015, a jeweler sued “Linda G.,” who left this one-star Yelp review on the jeweler’s Yelp page, under a defamation cause of action:

Run! Way overpriced, but worse than that is the ethics or LACK THEREOF!!

My husband, myself and some friends of ours were loyal customers of Pageo Newton, Nantucket and Boston. Together we spent 100s of thousands of dollars on some gorgeous but definitely way overpriced jewelry. It would be cheaper to fly to Italy, get a villa and buy it yourself!

…at one point I was in a very desperate situation and I sold my diamond ring to George my wedding ring/engagement ring. I was in abusive relationship… I thought I could trust him since I had given him so much business , but basically gave me not even near one 10th of what it was worth, but I was so desperate I took it so I could find a place to live and get away from my abusive husband who controlled all of our assets… George took all the jewelry that I had ever bought there and gave me peanuts for it!!

 

However, non-disparagement clauses in business form contracts will soon be pro se void, provided that President Obama signs the Consumer Review Fairness Act of 2016. On November 28, 2016, the Senate unanimously passed H.R. 5111, sending the bill straight to the President’s desk. The law renders any provision in a business form contract that restricts, forbids, or imposes a monetary penalty/fee on a party who posts a performance review or assessment of the other party’s goods and services per se void. Every time you check a box stating “I agree to the terms of service” before purchasing clothing from Nordstrom, subscribing to the Spotify music streaming service, or booking a flight using Travelocity. Many websites don’t even have a separate box that you check; purchasing the product signals agreement with the Terms and Conditions. Many consumers don’t read through the terms and conditions before purchasing the product; the Consumer Review Protection Act protects them from onerous litigation stemming from a $50 transaction.

Nothing in the Consumer Review Fairness Act prohibits businesses from bringing state law defamation causes of action against consumers who post negative reviews online, although a consumer’s statement must be false and posted with malice to prove a defamation claim in many states.

– Vid Sankar

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