Judge: Firms Can't Ban Online Negative Reviews

John Lister's picture

California has passed a law that means companies can no longer ban customers from writing negative reviews on websites. Even attempting to do so could mean they firms face a financial penalty.

The new law follows a protracted court battle that concluded this summer after an online gadget seller tried to "fine" a couple $3,500 for leaving a negative review on an independent website. A court eventually ordered KlearGear to pay more than $300,000 to the couple after its attempts to collect the "debt" hurt their credit rating.

KlearGear had been trying to enforce a clause in its terms and conditions that banned customers from making disparaging remarks online. In that case, the clause was invalid as it had hadn't been added until several years after the purchase in question.

Clauses Banning Reviews Could Prove Costly

Politicians in California decided such clauses should be banned altogether, removing any dispute about whether a specific clause was or wasn't valid. They've now passed a new law, which has just been signed by the state's governor.

According to the law, contracts involving a consumer "may not include a provision waiving the consumer's right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services." Under the new law, any such provision is immediately void, without affecting the rest of the contract. (Source: legalinfo.ca.gov)

The new law doesn't just affect firms that try to enforce such clauses. Any company that includes such a clause can face a fine of up to $2,500 for a first violation and $5,000 for further violations, which can rise to $10,000 if a court rules that the company included the clause intentionally, knowing that it broke the law.

Firms May Look For Review Loopholes

While the fines are relatively small, the key to the law in practice is that it should simplify court cases for consumers. That's particularly important where it's the consumer trying to get money back from the company, rather than the company trying to collect money from the consumer.

For example, a hotel with a "no negative reviews" clause might impose a penalty by deducting the money from a security deposit or credit card hold, meaning the consumer would have to go to court to challenge the penalty. That process should be much simpler now it's effectively guaranteed the penalty will be thrown out.

Writing for Forbes, Eric Goldman noted that the new law won't stop all cases of companies trying to use contracts to prevent consumers speaking out about bad service. He notes that some firms have tried using clauses that mean the consumer automatically surrenders the copyright to any review they write about the product or service, no matter where it appears. That makes it simple for the firm to demand the review is taken down. (Source: forbes.com)

What's Your Opinion?

Have you ever spotted a "no negative reviews" clause in an online terms and conditions? If so, has it stopped you writing an online review? Or would such a clause stop you buying from the company in the first place?

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bigjohnt's picture

Aren't we somewhere within the provisions of the "Free Speech" amendment?
If I spotted such a clause, I will stop right there. No business.

VJ's picture

I concur -- if I SAW any such clause, I wouldn't do any further business. I review all Terms and Policies online, specifically looking for such limitations ... will add a search for "review" and "Comments" to my review process. Unfortunately, written contracts are less easy to read through -- often containing fine print that's hard to read. Hurrah for the lawmakers on this one.