Online reviews have resulted in unintended consequences for some.

by Sean O'Bryan

I had a client ask me an interesting question last week: “Can I be sued for leaving a bad review about a restaurant we visited and didn’t like?”

At first blush - I said of course not.  But then I figured I had better look into this a bit further.  And much to my surprise - the answer wasn’t so simple.  You possibly could be sued or otherwise held liable for posting a negative online review - even if it is factually accurate.  In fact, people have, and have lost in court on this issue.  Let me explain.

In a nutshell - because online reviews have become so crucial for some businesses - a few have resorted to placing sneaky provisions in their small print that can contractually prohibit you from posting a negative online comment about that company - or face a fine or worse.  A few others businesses, upset that an online review rose to the level of being libelous, have sued the person who made the review.  This problem has become bad enough that one state passed a new law effective January 1, 2015 that stops companies from including such a prohibition against truthful online reviews.  That law is being called the "Yelp Law” after the website that rates restaurants and similar businesses with the help of online reviews by actual consumers.

We will look at these cases individually, and what happened in each, but first - some background.  When I first starting practicing law 25 years ago - there was no internet as we now have in its current form.  Instead, consumers looking for a business went to the yellow pages.  This of course has change in a very fluid and dramatic way.

Today, it is rare that I personally leave the house to eat at restaurant, spend a night in hotel, or purchase anything without first investigating online.  And yes, I personally read the reviews.  These reviews often influence how I spend my money.  I’m sure you do the same thing.

Businesses know this.  Consequently, protecting their online reputation is important.  Many hire consultants who work hard to improve their online presence. They take professional pictures that stage their business or product in the best possible light.  This can include subtle tactics designed to improve a business’ ranking on search engines or such sites as Yelp or Trip Advisor.  Businesses will hire professional reviewers who make a living writing and submitting positive review - often for businesses they have never even visited.  Many of these “review farms” involve reviewers who live and work overseas in countries such as India or Indonesia, and are paid a small fee for posting something positive about a business.  Websites like Yelp have gone to some lengths to prevent the ghost written reviews - but they continue.

There are basically 2 ways that submitting a bad review about a business can backfire: First, the company can sue you for libel.  In order for there to be an actionable claim - what was posted must be factually inaccurate and/or intend to damage the reputation of the business.  Second, some companies have started to include language in the fine print of their terms of service that prohibit you from posting a negative online review, and include a monetary penalty if you do.

Early last year, a Fairfax, Va., jury found that a homeowner defamed her contractor when she wrote a pair of scathing reviews of his services, accusing him of botching her home renovation and stealing jewelry during the construction process. The contractor sued her for defamation and sought $750,000 in damages.   A pair of Arizona surgeons won $12 million in a lawsuit against a patient who created an entire website accusing the doctors of botching her plastic surgery. And in November, a Texas woman claimed a retailer not only fined her for a negative review she posted, but retaliated by reporting her debt to credit bureaus afterward.

Litigation is not a good substitute for customer service. Businesses that try to sue their customers into silence rarely prevail, end up wasting their own time and money and usually bring additional, unwanted attention to the original criticism.

Yelp has not been happy with this pattern of lawsuits.  Their senior litigation attorney said "litigation is not a good substitute for customer service. Businesses that try to sue their customers into silence rarely prevail, end up wasting their own time and money and usually bring additional, unwanted attention to the original criticism." 

In order to stop negative review before they happen, some businesses had tried changing the contracts they use to deal with the public.  

The Union Street Guest House in New York's Hudson River Valley attempted to fine a wedding party $500 for each negative online guest review. The specific language in the hotel's terms outlined how the $500 fines would be withheld from the wedding party's security deposit until the negative reviews were taken down.  However, in response to a flood of negative attention, these provisions have since been removed. 

But some companies don't back down.  One online retailer, KlearGear.com, billed a customer $3,500.00, citing its terms of service after a customer posted a negative review in response to purchasing an item through their website.  The item cost less than $100.  The $3,500.00 charge was first attempted to be added to the customers credit card.  When the customer was able to have the charge reversed, the company turned the charge over to a collection bureau.  The customer continued to refuse to pay the fine, and received a negative collection account on their credit score.  This case prompted one California lawmakers to introduce a bill last year to prevent companies that do business in that state from including such language in their terms of service.  This "Yelp Law" passed the state's legislature and became law January 1, 2015.  However, it only protects California consumers.

People in Michigan have no such protection currently. Make sure that your homeowner’s policy covers libel suits

People in Michigan have no such protection currently.  One attorney who handles libel defense claims stated "I think the takeaway for consumers from this case is to tell the truth, be factual, have back-ups for your claims and make sure that your homeowner's policy covers libel suits. That's always the first thing I ask people when they come to me. 'Do you have homeowner's insurance and what does your policy say?'"