Congressman Eric Swalwell (D-CA) has introduced a bill to make it illegal for companies to punish consumers for writing bad reviews. This bill is called the Consumer Review Freedom Act. It would stop companies from enforcing contractual clauses that penalize consumers for posting a review of the company’s services or products. In addition to making such clauses unenforceable, it would make them unlawful. It further empowers the FTC and state attorneys general to take action and impose fines against those companies that include these clauses in contracts. This bill was introduced immediately following California Governor Jerry Brown signing a similar bill into the California law books.
This bill is reasonably limited, however. Companies can still have non-disparagement clauses in contracts with employees and they can still protect trade secrets, medical information or law enforcement reports. This bill also does not give a license to lie about a company’s products or services. Defamation suits are not barred so if a company believes that your review is not just negative but also untrue, then it still has the ability to sue you.
The Consumer Review Freedom Act is in response to several instances of businesses aggressively attacking negative reviewers. The most notable instance lead to a consumer lawsuit, Palmer v. KlearGear. In this case, the plaintiffs sued KlearGear for credit damage and emotional distress resulting from being sent to collections over a $3500 charge from KlearGear that arose under an anti-disparagement clause. The plaintiffs were charged when they refused to remove a negative review and they refused to pay. While KlearGear lost a default judgment and had to pay $306,750 in damages and $47,596.86 in attorney’s fees, the reasoning was not that the clauses were illegal. The ruling was that KlearGear was liable for “violating the federal Fair Credit Reporting Act, for defamation, for intentional interference with prospective contractual relations, and for intentional infliction of emotional distress.” This new bill would make the whole practice illegal thus preventing other consumers from being fined for negative reviews.
Regardless of the legality of the practice, it is generally not advisable for businesses to aggressively target consumers who post negative reviews. This is for the simple reason that it is likely going to be bad for the business. One such instance that made the news recently was that of the Union Street Guest House in Hudson, NY. The hotel had apparently published a notice that a $500 fine would be charged to wedding parties for every negative review of the hotel left by a guest of that wedding. While the hotel claims that the policy was a joke and never enforced, the negative reviews flooded in and the hotel’s rating plummeted to just 1 star. Aggressive attacks on your customers can and often do lead to a public relations disaster.
Businesses need to find a good way to deal with negative reviews that doesn’t involve antagonizing customers. One suggestion might be to correct the problem and then contact the person who wrote the review, thank them for their criticism and invite them to return to change their opinion. Another way for companies to deal with this is to do a better job encouraging customers who enjoyed their products or services to write good reviews. Lastly, providing quality services and products will help to avoid and mitigate any bad experiences.