The Consumer Review Fairness Act of 2016 was signed into law by President Obama in December in an attempt to protect consumers who leave reviews online. Some businesses tried to prevent customers from leaving negative online reviews with “gag clauses”. These provisions would state that customers who posted negative online reviews could be subject lawsuits and forced to pay damages or fees.
A hotel in New York tried to implement one of these gag clauses by fining guests $500 for every negative review they posted. This type of contract provision is now illegal under the new law, which makes void any form contract that “prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews”.
How Businesses Can Protect Themselves From Negative Reviews
While the Consumer Review Fairness Act prohibits businesses from restricting negative online reviews, it does not give free reign for online reviewers to post anything they want that disparages a business.
The new law specifically notes that it does not limit civil actions for defamation, libel, or slander. A consumer has the right to post a critical review, but if they post something that is false, they can still be liable for defamation.
Because a negative review on a website such as Yelp can seriously damage a business, some business owners may take action to stop defamatory reviewers. In the case of Hassell v. Bird, 247 Cal.App.4th 1336 (2016), an attorney sued a former client for posting a defamatory Yelp review. Not only did the plaintiff win monetary damages, but Yelp was also ordered to remove the defamatory statement from its website. The California Supreme Court will review this case to decide whether Yelp must remove this statement.
Most businesses will not take legal action to get a defamatory review removed. In fact, we usually recommend efforts to increase positive reviews as the best way to minimize the impact of a negative review. However, in extreme cases, a lawsuit is a strategy that offers a way to protect businesses from genuine defamation. If a defamatory online review is hurting your business, an experienced business lawyer can help you determine the best way to solve your problem.
For critical reviews that are legitimate, businesses would be wise to quickly respond to feedback and attempt to make things better. Encouraging feedback is also a good way to let your customers know that you are open to hearing their concerns, as well as their positive reviews.
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