Friday, October 17, 2014

Do not disparage, part 2

Last month I reported here on a new California law designed to protect consumers from "non-disparagement clauses"—nasty little provisions usually buried deep in a company's Terms of Sale that threaten to hit consumers with hefty fines if they ever publish a negative review of the company. Clauses like these have been the focus of numerous lawsuits recently, most notably the notorious KlearGear case in Utah. In this case, a couple posted a negative review of KlearGear.com after placing an order that was never delivered and receiving poor customer service from the company. KlearGear.com got wind of this bad review several years later and ordered the couple to take it down or pay a fine of $3,500 for violating their non-disparagement clause—even though (a) the couple had never actually received their order, and thus technically had never "done business" with KlearGear.com, and (b) this clause wasn't actually a part of the site's Terms of Sale at the time the order was placed. After months of legal wrangling (which you can read about in detail at Ars Technica), a court found in favor of the couple and ordered KlearGear.com to pay $306,750 for compensatory and punitive damages, as well as attorneys' fees. (The clause in question has now been removed from the site's Terms of Use, although given this company's record, it's not inconceivable that they might try to enforce it anyway.)

In my post last month, I noted that California was the only state to have a law protecting consumers from non-disparagement clauses, so the best protection for those of us who live elsewhere is to look carefully for such a clause in the Terms of Sale on every site we use. However, it looks like that may soon change. Just one day after I posted my article on the California law, U.S. Representative Eric Smalwell (D-CA) introduced a bill in the House to ban non-disparagement clauses nationwide. According to Forbes magazine, the bill "says that businesses could not prohibit such reviews, impose a fine for posting a review, or require consumers to provide the business with exclusive rights to such reviews." Any clause that does any of these things would be legally unenforceable and would also be considered a violation of the Federal Trade Commission Act. (You can read a summary of the bill on the official Congressional website.)

I don't know about you, but I've already e-mailed my Representative urging him to cosponsor this bill. I hope enough other people do likewise to give this legislation some momentum and, with luck, help us non-Californians get some protection against these ridiculous, harsh, and blatantly unconstitutional clauses.
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