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Posted March 21, 2017.
Every small business fears the online review by the nutcase who trashes your business.
Because a small business might get only a few reviews, a real stinker could really hurt.
Related to this, a new federal law prohibits businesses from using form contracts to prevent consumers from posting reviews about those businesses. While you need to comply with the law, there still are some proactive things you can do.
The new law is the Consumer Review Fairness Act. It took effect on March 14.
Key things about the law:
• It prohibits using a form contract to ban consumers from posting a review of a business or its goods or services. For example, a business could not use its online terms and conditions, or a sales form signed at the point of service, to prohibit a consumer from posting a critical review on Yelp or Amazon.
• A business cannot use a consumer contract to prohibit photographic or video reviews. For example, you can’t stop someone from posting a picture of a poorly cleaned doctor’s office or a skimpy entrée served at a restaurant.
• The law doesn’t apply to employment or independent contractor relationships, so it doesn’t give you immunity to blast your employer online. Also, it doesn’t cover business-to-business relationships.
• The law applies only to form consumer contracts where there is no meaningful opportunity to negotiate. A business could offer a contractual incentive to a customer for that customer to forgo posting negative reviews. Also, non-disparagement clauses are still okay in settlements of disputes between consumers and businesses.
• The new law, by itself, does not create a basis for suing a business for using an anti-review clause. A clever attorney might be able to couple this new law with a state consumer-protection law to create a basis to sue. Mainly, the law is a defense against a business trying to enforce an anti-review clause.
• The law does not enable you to recover your attorney’s fees in litigation from a business that uses an anti-review clause.
• Starting in December 2018, the Federal Trade Commission and state attorneys general may prosecute businesses that violate this law. Usually such government organizations prosecute only a few high-profile cases to set an example.
So, if you own a small business, what can you do to preempt nutcase bad reviews?
Start with common sense. Provide a great product or service and encourage your customers to post reviews about it. When you get a bad review, make a show online about being deeply concerned and offering to make things right.
As for the law, among other exceptions, a business can still sue over a defamatory consumer review. “Defamatory” means the review is factually false (not just an opinion) and harmful.
This means you could include a clause in your consumer contract that prohibits defamatory reviews, although you don’t need such a clause to sue for defamation. The key is to expressly provide for penalties that defamation law does not supply, like recovery of attorney’s fees and stipulated monetary damages. This clause would be a preemptive warning shot to potential nutcase reviewers.
Perhaps this clause would do the trick and pass the public-relations test, because you should expect folks to talk about this clause online:
We aspire to provide you the best products and services. If we fail to meet your expectations, please let us know. We want to make you happy!
While we hope you’ll tell us directly if you are disappointed, we welcome online reviews. Of course, we don’t mind you spreading the good word about the wonderful experience you’ve had with us!
But sometimes, no matter how well you do, someone might falsely trash you in a review. We hope it never comes to this, but you agree that, if we sue you for publishing a defamatory (factually false and injurious) review about our business, goods, or services, the winner on that defamation claim shall recover its reasonable attorney’s fees from the loser. You also agree that, at our option as an alternative to proving our actual damages, if we win a defamation claim, we shall recover $1000 from you in liquidated damages for each defamatory statement.
It’s not my specialty to tell you whether such a clause would be good public relations, but if your small business lives in fear of the online nutcase complainer, perhaps having such a clause would help.
Written on March 21, 2017
by John B. Farmer
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