Thursday, September 18, 2014

Do not disparage

I just read an article in Money Talks News about a new California law that makes it illegal for companies to enforce "non-disparagement clauses" against consumers. I wasn't even aware that there was such a thing, but according to the article, there are some companies that actually prohibit their customers from posting negative reviews online. If they do, they can be hit with hefty fines. An article about the same law in The Consumerist offers the examples of KlearGear.com, which "tried to slap customers with $3,500 penalties if they complain about a purchase in a public forum," and Accessory Outlet, which "charges customers $250 for even threatening to complain online or to issue a credit card chargeback."

You may wonder why any consumer would ever do business with a company that had a clause like this in its contract. Surely its mere presence should be a giant red flag, since companies that actually provide fair treatment and decent service don't need to suppress negative reviews. In particular, a clause that prohibits you from refusing the charges on your credit card seems to say, in essence, "When you enter into an agreement with us, you agree to pay us whether we meet our end of the bargain or not." Why would anyone ever agree to this?

The answer, according to the Consumerist article, is that most consumers didn't agree to it, or didn't know they were doing so. The non-disparagement clause at KlearGear.com was "buried two pages deep on the site’s Terms of Sale, where no reasonable person would be expected to find it." The one at Accessory Outlet was in a Terms of Sale agreement that "customers are not required to agree to before making a purchase." You have to wonder how the company can argue that its customers are bound by an agreement they never actually signed, but apparently they're counting on the fact that most individuals can't afford to take a big company to court even if the law is very clearly on their side.

California's new law makes clauses of this sort unenforceable in that state. Companies that try to enforce one will face civil penalties of $2,500 for the first offense and $5,000 for each subsequent one, plus an extra $10,000 fine for "a willful, intentional, or reckless violation" of the new law. Unfortunately, that doesn't help those of us who live in other states, such as New York, where, according to CNN, the Union Street Guest House threatened to "fine wedding parties $500 for any negative online reviews posted by any members of their parties." (The hotel later claimed this policy was put on their site as a joke and "was never meant to be enforced," but one Yelp reviewer says the hotel management sent an e-mail informing him that "your recent on-line review of our Inn will cost the wedding party that left us a deposit $500. This money will be charged via the deposit they have left us unless/until it is removed.")

So, for those of us who don't live in California, it looks like the best defense against these ridiculous clauses—at least until they're outlawed nationwide or slapped down by the courts—is to refuse to do business with any company that has one. And since you apparently can't count on the companies to tell you about these clauses themselves, that means seeking out the Terms of Sale for any site where you do business and actually reading them in full—or failing that, at least scanning for the words "non-disparagement clause" and treating it as a great big flashing warning sign. After all, as this article from the popular review site Angie's List points out, "If somebody doesn’t want you to say something negative about them, there’s probably something negative to say."

The article also notes that, while those who have actually done business with the company may be prohibited from posting bad reviews, there's nothing to stop people who haven't done business with the company from going online and saying that they refused to do so because the company has a non-disparagement clause. That would also warn other users of the review site that the uniformly positive reviews they see for the company don't mean it has no dissatisfied customers; it just means they don't dare complain for fear of being fined hundreds or even thousands of dollars. Personally, I think that would be even more damaging to the company than a negative review of its products or services. I'm not going to refuse to do business with a company just because of one or two bad reviews out of a mostly positive lot, because I know that there will always be a few cranks out there who just can't be satisfied. But if I see just a single review saying, "This company will fine you hundreds of dollars for complaining about it," my gut reaction is going to be, "Whoa, stay away from these guys."
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