New "Right to Yelp" Law to Protect Consumers

Consumer Review Fairness Act
Consumer Review Fairness Act. Dennis K. Johnson//Getty Images

Have you ever given a business a bad review? What if the company turned around and sued you for the bad review? Many of these bad reviews are found on online review sites like Yelp and TripAdvisor. But a new bill has been agreed to by Congress and it's expected to be signed soon by President Obama to protect consumers from lawsuits for bad reviews.  

How Consumers Have Been Sued for Bad Reviews

Businesses have been going after consumers who give bad reviews, using bullying and intimidation to force changes to the reviews.

If that doesn't work, some businesses are turning to lawsuits.  

In one such situation, Jennifer Palmer wrote a negative online review of a company called KlearGear. The company sued, claiming that the review damaged the company's reputation. KlearGear had a non-disparagement clause (explained below) in its terms of sale that forbid "any action that negatively affected KlearGear.com."

(According to Palmer, she never signed this agreement; it wasn't in place at the time of the order.) KlearGear claimed that Palmer owed them $3,500 in damages, which they took to a debt collector when she refused to pay. The non-payment damaged Palmer's credit rating. In 2014, a district court awarded Palmer damages of $306,750. 

In other cases, described by the San Francisco Chronicle, consumers have been sued for bad Yelp reviews of a plastic surgeon's surgery mistakes and a dentist's billing practices. 

Why Can These Businesses Sue Consumers? 

This is one of those times when it pays to read the fine print.

Many businesses include non-disparagement clauses in their terms of service. Terms of service are those long agreements that everyone requires you to accept, but that very few of us read. A non-disparagement clause says that the business can sue a customer who disparages it. (To disparage means to belittle, discredit, or lower the estimation of).

 

Clauses that restrict someone from making negative remarks are also sometimes found in employment agreements to prevent executives from leaving a company and trashing its reputation. 

Businesses don't like bad reviews, but they are a part of life these days. After many consumer complaints about these non-disparagement clauses and the lawsuits filed by businesses against consumers, Congress has taken action. 

Consumer Review Fairness Act —​ Coming Soon

At this writing, President Obama is set to sign into law HR 4111, called by some the "Right to Yelp" Law (more seriously called the Consumer Review Fairness Act), which prohibits companies from enacting non-disparagement clauses in terms of service. 

Here's What the Upcoming Law Says

The law makes non-disparagement clauses in form contracts void in certain circumstances. A form contract is one you sign when you buy something or if you use the services of a business. 

If a contract is void, it is unenforceable; that is, it can't be used to sue someone. The relevant circumstances that make a form contract void are: 

  • If it prohibits or restricts someone from "engaging in... reviews... of "the goods, services, or conduct of" another party to the contract, or
  • If it imposes penalties or fees on people who write reviews. 

There are other circumstances in this law that can make these form contracts void, but they don't deal with the subject of reviews. 

The Federal Trade Commission (FTC) and the states will be responsible for enforcement. 

Our Reviewer Society and the Consequences

Since the advent of Amazon reviews, everyone is asking your opinion about everything. You go to the dentist, have your car repaired, or buy a product online and someone wants your review. A review is an opinion. Consumers have a right to their opinions. And these opinions are on the internet for all to see. That's a good thing, right? The new law is intended to protect this right. 

But, remember, there's a difference between a legitimate negative review of a business and a spiteful rant or spreading untruths.

 

What About False Reviews That Damage Businesses? 

On the other side of this issue is the business that receives a damaging false review. Businesses must be able to protect themselves against statements that are libelous (false and damaging) that hurt the company's reputation. 

A consumer's right to an opinion about a product or service stops at the point when that opinion is defamatory (false and damaging). For example, you can say that a restaurant's food is bad (that's your opinion), but you can't say that the server stole your purse (if it wasn't the truth or you can't prove it). 

How Do Businesses Protect Themselves Against False Defamatory Reviews? 

Most businesses don't realize is that they are on Yelp (or TripAdvisor, for tourist sites), whether they sign up or not. Any customer can review any business. So what do you do about these bad reviews of your business, if you believe they are unfair? 

Lahle Wolf, Women in Business Expert, suggests: 

If you are plagued by bad Yelp reviews, you may want to claim your business account and offer a public reply. Just remember you are doing damage control, not firing back your own defensive, or angry rant. Do what your negative posters did not do and be objective and fair.

Wolf's review goes into more detail with information for businesses about reviews. 

What About the Consumer Review Websites?  

If you are a consumer ready to write a bad review of a business, check the terms of service. I checked on the Yelp Terms of Service and found this: 

You may expose yourself to liability if, for example, Your Content contains material that is false, intentionally misleading, or defamatory.... 

TripAdvisor's terms of use says: 

 As a provider of interactive services, TripAdvisor is not liable for any statements, representations or Content provided by its users in any public forum, personal home page or other Interactive Area.

Basically, if you use these websites, you're on your own. 

I will keep you posted on the status of this new law.