“Non-disparagement clauses” designed to prevent customers from writing negative reviews about a business are likely to become a thing of the past, according to The Consumerist. Companies that have such clauses buried in their contracts or terms of usage agreements will have those voided by bipartisan-backed legislation that was passed by voice vote Monday (September 12, 2016) by the U.S. House of Representatives. A version of the legislation was passed unanimously by the Senate last December.
If you haven’t heard of non-disparagement clauses, some business owners have inserted them in customer contracts and website terms of usage (like the ones everyone clicks “I agree” without reading) with the belief they will prevent customers from writing negative reviews about the business. (Here’s an example shared in an article from SmallBusiness.com about what can go wrong if a business owner tries to extend the non-disparagement agreement to friends of the customer.)
Why Congress took up the issue of non-disparagement clauses
Examples of non-disparagement clauses that were so over-reaching, it has made voiding them easy for lawmakers.
- A Texas pet sitter sued a customer for $1 million over a negative Yelp review.
- Online retailer KlearGear issued a $3,500 penalty after someone wrote a truthful but negative online review
- Cellphone accessory sellers have threatened to fine customers $250 for even threatening they’d post a negative review
- An apartment complex claimed to hold the copyright on all tenants reviews and photos of the property
Status of the legislation
As both the House of Representative and Senate versions of the law have near-identical texts and both chambers passed the bills with unanimous voice votes, a reconciliation of the two should pass easily. At that point, it would go to the White House to be signed into law by the President, who has indicated support.
Why is this good for businesses?
A bad review–especially one that is incorrect–is stinging. But attorney Paul Alan Levy from Public Citizen, who was involved in both the KlearGear and Texas pet sitter cases, told the Consumerist that passage of the legislation is also good news for businesses that do not need to paint a false picture of themselves by suppressing truthful criticisms. Businesses are harmed by competition from those companies that paint a fraudulent picture of themselves by using non-disparagement clauses.”
Also on SmallBusiness.com
VIA | The Consumerist
HT | Lifehacker.com