Businesses may believe that a negative review that hurts their reputation may be fodder for a lawsuit. But Capitol Hill, the site of the highest concentration of lawyers in the United States, doesn’t see it that way.
A proposed bill protecting the rights of patrons of a business to post negative reviews is gaining some traction in Washington. The U.S. Senate Committee on Commerce, Science, and Transportation recently held a hearing on a bill introduced by Senators John Thune (R-South Dakota), Jerry Moran (R-Kansas), and Brian Schatz (D-Hawaii), the context of which “would nullify any of the non-negotiable clauses that allow businesses to slap consumers with large fines for sharing their honest feedback.” A similar bill was introduced earlier this year in the House.
A recent case involving KlearGear.com sought $3,500 in damages from a man whose wife posted a negative review on their site, which violated the non-disparagement clause in the site’s terms of service. Those clauses are designed to “gag the consumer” and prevent postings of negative reviews. The KlearGear customer fought back, but the amount was reported to credit bureaus as an unpaid debt, which tanked the man’s credit rating. The couple appealed and won a six-figure judgment against the company, which will be dissolved before the end of the year.
The bill (S-2044), dubbed “The Consumer Review Freedom Act” is sympathetic to business owners by allowing them to sue if a reviewer posts a fraudulent review, but it will protect consumers from retaliation if they give honest negative reviews because of a bad experience. Consumers are not allowed to simply make things up as that could be defamation, which is actionable.
Senator Steve Daines (R-MT), a co-sponsor of the bill, likened the companies with anti-disparagement (or “gag”) clauses to insecure bullies on a playground, and he supports customers having a voice as it fosters competitive business.
Lawmakers are not the only ones looking out for consumers. The Federal Trade Commission recently filed a complaint against Roca Labs, Inc. and Roca Labs Nutraceutical USA, Inc., for attempting to enforce a “gag clause” that seeks to prevent customers from posting negative reviews about the companies’ weight loss supplements. Consumers unknowingly agree to abide by these gag clauses, frequently contained in “the fine print” of the terms of service, when they buy a company’s products.
Yelp, the most powerful and well-known consumer review site has been cultivating federal support for its users’ rights to freedom of speech for quite some time and sees special interest groups and businesses seeking to squelch those voices as a violation of the First Amendment. Lawmakers agree, which is why the bill was introduced.
Some business owners check online reputation sites such as Yelp and Google+, before morning emails as a way to stay on top of their online reputation and to get out in front of any negative reviews early to protect their reputation and their business. Positive online reviews can mean big business to companies. In 2013, 32% of consumers read online reviews. In 2014, that percentage was 39%. Still another study revealed that 61% of shoppers check product reviews before buying. Positive reviews can build a business up…. or destroy it, and managing an online reputation is a full-time job in itself.