No one likes a bad review, especially businesses that can be harmed by negative word-of-mouth.
For consumers, it’s a good practice to check out what others are saying about a business, product or service before buying something or entering a contract like a lease – third-party reviews can help you avoid fraud and scams, even if they can’t guarantee you’ll be satisfied with your purchase.
And businesses are rightly worried about negative online reviews, as people increasingly turn to sites like Yelp, Angie’s List, TripAdvisor and Apartment Ratings to seek out reviews for everything from hotels to car repair shops and physicians.
But some businesses have attempted to squash negative reviews by including “gag clauses” in form contracts, supposedly giving them the right to fine or sue customers who give them the thumbs down online.
These gag clauses, also called non-disparagement agreements, are legal nearly everywhere in the United States, except in California, where the legislature passed a law in 2014 banning the practice.
Nicknamed the Yelp Bill, the California law went into effect last year and imposes fines on businesses that put restrictions on consumer reviews in form contracts.
Now, the House of Delegates in the state of Maryland is considering a similar bill prohibiting the use of contract provisions to waive consumers’ rights to free speech.
Some examples of gag clauses in contracts include one used by a UK hotel to fine guests £100 for bad reviews, and a Florida apartment complex that threatened residents with a $10,000 fine for breaking a “social media addendum” to their lease prohibiting bad online reviews.
Probably the most famous example of a gag clause being used by a business as retaliation against bad reviews involved John and Jennifer Palmer, a couple from Utah who were fined $3,500 by online retailer KlearGear for a comment they posted on the review site RipoffReport.com.
When the Palmers didn’t pay the fine, the company reported them to credit rating agencies, which kept the Palmers from being able to take out a loan to replace a furnace in their home.
The Palmers were able to save enough cash to buy a new furnace, and took their story to local media, and eventually to the US Congress, where Jennifer Palmer told senators about her family’s ordeal.
In December 2015, the Senate approved legislation called the Consumer Review Freedom Act (CRFA), which would prohibit gag clauses anywhere in the US, but the bill still needs to pass the US House of Representatives and be signed by the president to become law.
The good news is that the CRFA has backing from members of both parties – Republicans and Democrats – so gag clauses could one day become illegal and unenforceable.
The Electronic Frontier Foundation (EFF) is supporting the CRFA, and the proposed law in Maryland.
One practice not addressed in the Maryland proposal, the EFF says, is a “disturbing trend” whereby a company uses legal clauses in contracts to assign the copyright for customers’ online reviews to the company.
Then, if the company doesn’t like a particular review, it can file a notice under the Digital Millennium Copyright Act (DMCA) to have the review taken down.
The EFF recommended that the Maryland legislature amend its gag clause bill to ban this tactic as well.
Image of contract courtesy of Shutterstock.com.
Jon
People should be able to anonymously report any such restrictions to Yelp. Yelp could then investigate, and try to substantiate the claim. If it does, it could put a big banner on the businesses page warning about the practice. This might reduce business enough to warrant a change in policy.
herzco
Why anonymously?
c.curtis
Presumably, anyone leaving such a review has signed the contract containing a gag clause. Telling Yelp to investigate is not publishing a review, so those making the reports would not be in violation of the clause and subject to fines.
Mahhn
Free speech, unless it makes someone or a company unhappy, then it’s bullying. Keep your mouth shut and get back to work or you will be fined or imprisoned. Welcome to the NWO, enforced by the TPP.
Peter
Yelp would not bother – most of the negative reviews for many businesses are difficult to find – they end up under “not recommended” reviews. They seem to want positive reviews for businesses. It is all done “automatically” – so why would they invest time and effort to actually determine if a review is valid?
herzco
Very sneaky for these companies to assign the copyright for customers’ online reviews to the company and then file a takedown request. Slimy, albeit smart. I hope language to keep this from happening gets added to the bill. (They should have their a**es handed to them)
ejhonda
Those companies behaving this way should be outed. Anyone know where they might be compiled?
Bryan
was thinking the same thing–clever. I’m not trying to be Mary Poppins here, but imagine how much good could be done if more clever folks like that bothered to think outside different boxes.
Steve
This sort of behavior in business is indeed disgusting. But I don’t think regulation by government is the best answer. What is really needed is pure and brilliant sunlight… getting the word out about businesses who operate this way. Some organization should get a website up to provide such information to the general public. That seems more cost-effective to me than spending bucks on lobbying the politicians to create more new laws that will undoubtedly be full of the usual loopholes, gotchas and favoring some over others.
s31064
“That seems more cost-effective to me than spending bucks on lobbying the politicians to create more new laws that will undoubtedly be full of the usual loopholes, gotchas and favoring some over others.”
Kind of like the Do Not Call registry. Great idea, except it doesn’t apply to companies/organizations you’ve dealt with in the past (in other words, most of the people you want to leave you alone with the exception of cold-callers) and political organizations. I wonder how that last exemption got added to the law?
Billy
What about businesses and individuals who leave negative reviews about their competition to impact them negatively? I would like to see a verification process put in place to prove the person leaving the review actually did business with the entity/individual…
roy jones jr
Well we got to take steps somewhere. And I’m for the hopeful change considering it would add some form of transparency when businesses (and online businesses) mire their terms of what they do in the grey area.
Pepe
Rather than post negative comments on goods and service providers, lets simply help each other post where we’ve made no agreements. If anyone needs a negative post made, I’ll post it for you (and I’m certain that there are others who will also). Let’s make these businesses who rather than learn from criticism attempt to silence it, pay for their misdeed ten-fold.