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 problem involves non-disparagement clauses. The terms of non-disparagement in a contract prohibit someone from making truthful but negative statements about a company, its employees, or products.
For example, if you write a review about your restaurant experience and say that the service was slow, the food was cold, that it was overpriced, and you give it one star, that is a negative review. These are disparaging comments about the restaurant.
Compare disparaging comments with libel. If you defame or defame someone, that means you have made factual statements about that person 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 is that bad companies were seeing negative reviews popping up online on popular websites like Yelp. To stop negative reviews and to keep only positive reviews from appearing, the companies included terms in their online purchase contracts that state that the consumer cannot make any derogatory comments about the company.
Often times, the abusive contract would include a term stating that the customer automatically owes thousands of dollars in penalties saying 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 threatened the consumer with thousands of dollars in damages unless they removed their review. Sometimes companies sued him, which generated some publicity.
The new California law creates section 1670.8 of the Civil Code. The law states that a business 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 contracts between companies.
The new law makes it illegal to have a non-derogatory clause in a contract, or even a proposed contract.
Nor can a company attempt to enforce such a term or threaten to enforce it.
If the business violates 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 offenses.
Also, if the violation is intentional, which is often the situation, 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 the consumer cannot be required to waive the law. Any waiver is void.
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 its product or service.
