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Non-Disparagement Clauses Can Reduce Citizen’s Free Speech

Posted on March 21, 2014

By signing on the dotted line, or agreeing to those endless terms of service, some customers are unwittingly giving away their right to free speech. Specifically, the right to write negative online reviews.

Experts say that more companies from wedding photographers to dentists are slipping non-disparagement clauses (and other language that prevents consumers from writing negative reviews) into the fine print almost no one bothers to read. Consumers who violate these policies may be sued and fined — even if the complaints are 100% true.

Rommel Canlas / Shutterstock.com

Anja Winikka, the site director for TheKnot.com, heard about two cases like this among brides in just the past couple of months. In one of the instance, a photographer threatened a bride with a $350,000 lawsuit over a bad review the bride wrote, after the bride says she had unknowingly signed a contract that included a so-called non-disparagement clause in it, she says. And Scott Michelman, an attorney with Public Citizen, a nonprofit consumer advocacy firm, says he thinks these kinds of cases are new in the past few years — and that recently “we’ve been hearing about them more.”

Part of the impetus behind companies adding in these clauses is the fact that an increasing number of people both write online reviews of companies and turn to online reviews to figure out what companies to do business with, says Michelman. As of the fourth quarter of 2013, there were more than 53 million reviews on Yelp (the number of reviews on the site grew 47% from the year prior) and currently the site has more than 120 million monthly visitors. But a bad review can hurt business, so companies are trying to prevent consumers from “trash-talking” them — even when said trash talk is true. (Some employers have long required employees to sign these kinds of non-disparagement contracts when they leave a company.) Typically, a person has the right to give their opinion or to make true statements of fact about a business; making false statements, on the other hand, is often libel, and plenty of people making such comments online already get sued for that.

Faced with such restrictions, some consumers, of course, simply remove the offensive post or pay the fine demanded by the company. Others fight back. New York resident Robert Allen Lee claims his dentist threatened him with more than $110,000 in fines after he alleged on Yelp and DoctorBase that she overcharged him and failed to submit his paperwork to the insurance company; in the packet that new patients like Lee sign, the dentist had included a privacy clause that prohibits clients from making public statements about her and that assigns her the copyright in anything they write about her, according to court documents. Lee is now suing the dentist, claiming that he doesn’t owe her that money (he also asserts that his statements about her are true). The dentist could not be reached for comment, but she did file a motion to dismiss Lee’s case (the motion was rejected by a judge last year); the company that created the contract the dentist used has since removed that language from its contracts.

And Lee isn’t the only angry customer taking a company to court over this issue. In December of 2008, Utah resident John Palmer claims he tried to make a purchase from online retailer KlearGear.com, but never got the goods he ordered. Angry at the company, his wife Jennifer Kulas posted a negative review of them on RipoffReport.com in February 2009, hoping that it would inform others of the alleged actions of the company. But the result wasn’t at all what the couple expected: KlearGear allegedly fired back at the couple, demanding that the review be removed or the couple pay $3,500 in damages, saying that by buying items on its site, the couple had agreed to its terms of service, which it said included a non-disparagement clause, according to court papers filed in December 2013. The couple’s attorney says that KlearGear then reported the $3,500 as unpaid debt to the credit agencies, which harmed Palmer’s credit. “KlearGear attempted to punish a dissatisfied customer for his wife’s criticism of KlearGear, then abused the credit-reporting system in an attempt to extort money that the customer did not owe and could not possibly have owed,” the lawsuit filed by the couple against KlearGear claims. KlearGear failed to show up in court this month for a hearing on this case, Palmer’s attorney says; KlearGear could not be reached for comment.

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11 thoughts on “Non-Disparagement Clauses Can Reduce Citizen’s Free Speech

  1. Interesting article. I'm a little bit torn on this topic. On the one hand, I think the rise of crowd-sourced rating systems is a major positive for a libertarian society, and I'd like to see them spread much farther. On the other hand, you know that plenty of people are going to abuse that system. In the long run I'm sure that systems will develop to allow businesses to dispute negative ratings, but in the mean time the power balance may be shifting too far in the direction of the customer. Not that the customer shouldn't be supreme, because he should, but neither should a few idiots be able to sink a business because they didn't get their way.

  2. Steven Swedenburg says:

    16 Am Jur 2d, Sec 177 late 2d, Sec 256:
    The general misconception is that any statute passed by legislators bearing the appearance of law constitutes the law of the land. The U.S. Constitution is the supreme law of the land, and any statute, to be valid, must be In agreement. It is impossible for both the Constitution and a law violating it to be valid; one must prevail. This is succinctly stated as follows:
    The General rule is that an unconstitutional statute, though having the form and name of law is in reality no law, but is wholly void, and ineffective for any purpose; since unconstitutionality dates from the time of it's enactment and not merely from the date of the decision so branding it. An unconstitutional law, in legal contemplation, is as inoperative as if it had never been passed. Such a statute leaves the question that it purports to settle just as it would be had the statute not been enacted.
    Smart up People.

  3. lilbear68 says:

    no fine print is ever in the interest of the consumer

  4. Can'tTrust'Em says:

    What the hell is Gary North doing siding with ultra-liberal Public Citizen? Used to be the Tea Party was committed to free enterprise, not this anti-business drivel!!

  5. I'm not an expert, but from what I gather, there is adequate protection for both sides under our current system. Like most or our system it depends on honesty. The service or product provider has legitimate redress against liable and slander and the consumer can sue for damages or complaint without risk of a legal backlash from the provider, as long as they are telling the truth.

  6. Well said.

  7. Gary North is not
    on the side of" business.. OR consumer. He is always,and ever, on the side of honesty, integrity, free markets…. if the dentist did not perform to the satisfaction of the customer, the customer is fully within his rights to say something. And other potential customers have the right to find out about that dentist. Never filed the paperwork with the insurance company? That leaves the patient liable out of his own pocket, he's spent the money for his dental insurance and not got what he's paid for. North would NEVER come down on the side of such a ripoff. Ask him…..

    Whenever I find myself in need of somt good or service, I will try and learn what I can about the potential providers. And I want HONEST evaluations, not some bought and paid for screed that is worse than a slick hollywood TeeVee advert. I am about to spend MY money, and have certain expectations of what that money will bring…… and so want to "make my shot tell". Honest reviews hep me do that.

  8. I wonder if it would be OK to say, " I unknowingly signed a non-disparagement clause with ——-, so I'm prohibited under threat of lawsuit from expressing what I think about the (service, product quality, treatment, care) I received". That wouldn't be disparaging, but a statement of provable fact. It would be difficult to prove what the writer actually believed.

  9. So does that mean all of Obummers executive orders are illegal?

  10. This to me is about you or me not being able to decide something. They have to decide it for you, which is not good.

    Let me explain. If there is a bad review the company has a right to explain their side. I often see that and can quickly tell, more or less, what happened and often times I don’t agree with the reviewer, being especially harsh or unfair to the company.

    On the other hand, I see a review and the companies response and something tells me the company does not give a damn.

    So, it’s you and me that should decide if everyone is responsive, fair, and reasonably truthful.

    OK, but what happens if they are not? Believe you me, we can tell. We are not STUPID like liberals have us all believe. Let us decide for the most part.

    Except when it comes to libel. That’s another story.

  11. I always say, the smaller the print the more IMPORTANT it is. The bigger the print the less important it is. So if you want to find out something, read the small print FIRST.