There is a new trend popping up across the nation that could have you eyeing the “terms and conditions” agreements online more seriously before clicking “I accept.” Clauses banning consumers from writing bad reviews about companies, or non-disparagement agreements, are appearing more frequently in online purchase terms and conditions.
These agreements have caused quite a stir across the United States where, in some cases, consumers are being sued by companies for posting bad reviews about them on sites like Yelp.com or RipOffReport.com (even if the content in the reviews is true).
Bingham Greenebaum Doll LLP attorney Jonathon D. Wright focuses his practice helping businesses proactively manage legal risks. He is a member of the firm’s Corporate and Transactional Practice group, and he has a wide variety of experience in contract information and language.
Wright says, “When parties fail to properly document a transaction (or some other type of agreement), they often find their relationships governed by default statutory provisions. Worse yet, when a party fails to adequately review and understand documents memorializing an agreement, they can find themselves subject to onerous, unilateral or surprising terms.”
In other words, people who do not review the language in their contract very well can are often taking a risk when it comes to legal action. If you do not understand the languages used in the agreement but you still agree to it, you may find that you have to abide but very surprising conditions.
So, why are companies resorting to these fine-print terms? Many consumers read online reviews for more information about companies, products and services before making a purchasing decision. With over 120 million people visiting sites like Yelp.com each year, a bad review can hurt business… big time.
“Online communications may be less formal and may not be directed at the individual or company about which the communication relates. Nevertheless, it reaches a wide audience and can have very real legal consequences,” said Wright.
Cases involving disparagement clauses vary across the United States but are becoming increasingly popular. In one instance, Anja Winikka, site director for TheKnot.com, heard of a photographer threatening a bride with a $350,000 lawsuit over the bad review she posted after signing a non-disparagement clause without knowing it. According to the Wall Street Journal’s Market Watch that is where people are getting in trouble. They do not properly understand the contracts and the agreements they are signing before entering a contractual relationship.
“No matter how many times I see it, I am always surprised by the extraordinary amount of commerce and business transacted without an appropriate level of documentation, or without an appropriate review of the subject documentation,” said Wright.
Companies filing these lawsuits are claiming the poor reviews fall under defamation and libel laws and that the reviews are costing the company money. They also believe that the reviews are hurting the reputation they have worked hard to build.
So, will these lawsuits and claims even hold up in court? No case has actually made its way through the entire court system yet, but if a case does make it through, it will be interesting to see what the judge’s ruling may be. It may come down to a case-by-case distinction, which could mean a harder time for plaintiffs to prove their case in the long run.
“Even though individuals have certain constitutional rights in free speech, others have, often times, conflicting individual privacy rights. Therefore, if a communication is untrue or otherwise relates to matters subject to a confidentiality or non-disparagement agreement, it could give rise to a defamation, libel or breach of contract claim,” said Wright.
For now, it is definitely better to read the entire contract before signing. Seek help if you do not understand the language in the agreement because if you do not, it will cost you in the lost run. As the old saying goes, “an ounce of prevention is worth a pound of cure.”