NEW YORK (MainStreet) — If you’re not reading the service agreement (and who does?) before you post that scathing, but honest review online, you might be getting yourself into financial hot water – at least for now.
Known as non-disparagement clauses, some businesses are adding fines for anyone who posts a negative review of their product or services online into the fine print of their service agreements. And we’re not talking libel here. Even if what you write is 100% true, you could still be facing a hefty fine if you post your woes online.
Instances of businesses retaliating against consumers have become so problematic that California legislatures signed a bill making such recourse by businesses illegal in California starting in 2015, and they’re working to take it to a federal level.
California Governor Jerry Brown recently signed this bill that makes attempting to silence a customer who posts a negative review online or takes other legal actions against a company illegal in California.
Starting in 2015, the bill, initially proposed by Los Angeles Assemblyman John A. Pérez, will result in a penalty up to $2,500 for first-time offenders and up to $5,000 for repeat violations for any business that tries to fine or prevent customers from voicing their opinions.
Customers who wish to take things further can be awarded a civil penalty up to $10,000 if they can prove a business intentionally violated the law.
How Bad Is It Elsewhere?
In 2008, a Utah couple made a purchase from the online retailer KlearGear.com. When their purchase didn’t arrive, they posted a negative review to the complaint site RipoffReport.com. Then in 2012, the company contacted the couple and demanded $3,500 for violating the company’s non-disparagement clause which states customers cannot take “any action that negatively impacts KlearGear.com [or] its reputation,” according to the advocacy group Public Citizen who sued the company on the couple’s behalf.
In another case filed by Public Citizen, a Wisconsin resident was fined $250 for threatening to take negative action against another online retailer called Accessory Outlet. The issue started over an iPhone case the customer ordered but never received. When the company refused to cancel, the customer said she would request a chargeback through her credit card company. Then she was slapped with a fine for violating the company’s non-disparagement clause, which states that customers can’t make “any complaint, chargeback, claim, dispute,” or “any public forum post, review, Better Business Bureau complaint, social media post, or any public statement regarding the order,” or threats to take any of these actions, within 90 days of a purchase,” according to Public Citizen.
To make matters worse, your financial woes might not end at a fine. If you are accused of violating a non-disparagement clause and you refuse to pay the fine, the company might turn the unpaid ‘debt’ over to a collection agency. In the KlearGear.com case, the couple’s $3,500 was turned over to a collection agency. In the Accessory Outlet case, the consumer was threatened with collections. Even if the fine is bogus, consumer credit scores take a huge hit anytime a collection agency gets involved.
And just to add insult to injury, many experts believe these clauses don’t only exist in the online retailer space. Any time you’re given a terms of service agreement, there could be a non-disparagement clause.
While the California law may be the first state law to address the issue, the rest of us may be protected soon if lawmakers pass a newly proposed act.
The Consumer Review Freedom Act, introduced to Congress by California Representatives Eric Swalwell and Brad Sherman, would prohibit any business from using these non-disparagement clauses to fine consumers who post honest negative reviews online.
--Written by Angela Colley for MainStreet