Invoking hidden “anti-disparagement clauses” in customer contracts, some companies — until recently — got away with trying to punish customers who write a bad review and post it on the web. But now lawmakers are clamping down on businesses that try to stamp out free speech on online review sites.
Last week, California Governor Jerry Brown passed a statewide law that bans these anti-disparagement clauses. And earlier this week, California Representatives Eric Swalwell and Brad Sherman introduced a bill, entitled the Consumer Review Freedom Act, which aims to take this legislation a step further by making it a national standard, forbidding companies to penalize customers who post negative reviews online.
In an article about the bill, Inc. notes that “anti-disparagement clauses are a bad idea, and they’re probably unenforceable.”
But that hasn’t stopped some companies from trying to enforce these clauses (that most customers are not aware of when they sign contracts) and punish customers who write online negative reviews of them. In the past, some businesses have not only fined customers but have destroyed their credit; a few have taken customers to court.
Inc. cites one case, in which online retailer Kleargear “tried to slap a customer with a $3,500 fee when his wife posted complaints about the company’s customer service online.” Thinking the fee was “frivolous” and not to be taken seriously, the customer didn’t pay it.
As a result, Kleargear reported the customer to a credit agency, which destroyed the customer’s credit. Eventually, a judge ruled against Kleargear and ordered it to pay $300,000 in damages.
Under California’s recently passed legislation, businesses that attempt to squelch online negative reviews via anti-disparagement clauses will be fined up to $10,000.
Inc. says that so far 19 other states “have what’s known as anti-Strategic Lawsuit Against Public Participation laws on their books, according to the Digital Media Law Project.” Although these laws are not as binding or comprehensive as California’s law, Swalwell and Sherman’s bill “would definitively make anti-disparagement clauses unenforceable, although it would reportedly allow them between businesses and their employees.”