Can you be sued for saying you didn’t like a product? Or because a business didn’t like your negative review on Yelp?
It has happened, and now California lawmakers have stepped in and banned the practice.
The issue involves non-disappearance clauses. The non-disparagement terms in a contract prohibit anyone from making truthful but negative statements about a company, its employees, or products.
For example, if you write a review about your experience at a restaurant saying that the service was slow, the food was cold, the price was excessive and you give it one star, that is a negative review. These are disappearing comments about the restaurant.
Contrast derogatory comments with defamation. If you slander or slander someone, that means you have made factual statements about them that are false. False statements are still against the law in California if they are defamatory, and you can be sued for making them.
What was happening was that bad companies were seeing negative reviews appear online on popular websites like Yelp. To stop negative reviews and only positive reviews from appearing, companies have included terms in their online purchase contracts stating that the consumer cannot make derogatory comments about the company.
Often the abusive contract would include a term stating that the customer automatically owes thousands of dollars in penalties that say something negative about the business. The client may also be required to pay the company’s attorney’s fees.
When a negative review appeared, the company would threaten the consumer with thousands of dollars in damages unless the review was removed. Sometimes companies actually sued him, this had generated some publicity.
The new law in California creates section 1670.8 of the Civil Code. The law states that a company can no longer include these terms in a consumer contract. This is a contract for the sale of consumer goods or services. The new law does not apply to business-to-business contracts.
The new law makes it illegal to have a non-derogatory clause in a contract, or even a contract proposal.
A company may also not seek to enforce such a term or threaten to enforce it.
If the business breaks the law, the consumer or the California Attorney General can sue. For a first offense, the fine is up to $2,500. Penalties increase for subsequent violations.
Additionally, if the violation is intentional, which is often the case, another $10,000 in fines can be recovered.
These are in addition to any other damages allowed by law.
Finally, California says that this is an important public policy issue and that a consumer cannot be required to waive the law. Any waiver is null.
The bottom line is that California now imposes severe penalties on any business that tries to prevent its customers from saying what they really think about their product or service.
