Imagine that, this past summer, you hired a lawncare company to manage your yard. They did a stupendously horrible job and killed much of your grass, so you wrote an unfavorable review about them on Yelp.
A week later, you received a notice from the company’s attorney demanding $5,000. Why? Because you violated the “anti-disparagement clause” included in your contract.
What in the world does this mean? More importantly—although this is a fictional scenario—do you have to worry about anti-disparagement clauses in your day-to-day life?
Here, we’ll quickly talk about what anti-disparagement clauses are, why they’re bad for consumerism (not to mention free speech), what they look like, and how you can avoid them.
What Is an Anti-Disparagement Clause?
Let’s say that you had a legitimate disagreement with your former business partner. In fact, things got nasty enough that it ended your business relationship with one another.
Thankfully, once you had your day in court, both parties were able to come to a relatively quick agreement. But as part of the resolution, you each signed a document that stipulated you can’t disparage—discredit, ridicule, slander—one another in public.
In the past, it was primarily circumstances like these where anti-disparagement clauses were used. After all, as a way of avoiding future legal problems between corporations, it makes perfect sense, right?
Recently, however, these clauses have eked their way into everyday parts of our lives.
We’re beginning to see disparagement clauses in completely common business interactions, such as when shopping online, leasing an apartment, hiring a wedding planner or pet sitter, etc.
In a nutshell, anti-disparagement clauses could be found in just about any consumer transaction where you have to sign a contract or agree to Terms & Conditions.
From a Legal Perspective, What Does “Disparagement” Even Mean?
Disparagement clauses tend to be exceptionally vague. I mean, think about it: What does it mean to disparage someone?
The Merriam-Webster dictionary defines it as, “to describe (someone or something) as unimportant, weak, bad, etc.” Given this, can you see where potential issues might occur?
Let’s quickly break it down: In cases of libel and slander, an individual knowingly spreads false information about someone with the explicit intent of damaging their reputation. In other words, terms like libel and slander reference ill intent using falsehoods.
Disparagement, on the other hand, only references the action, not the intent.
So, to continue with our example above, these clauses would make it very costly for you to share your negative experience with the lawn care company, even though a) it’s based on fact and b) you’re only trying to inform others, not to harm the company’s reputation.
In short, anti-disparagement clauses have the very real ability to limit your free speech as a consumer—or at the very least, to make it expensive to write a negative (but truthful and well-intentioned) review about a company.
The good news is that the legality of these types of clauses is quickly crumbling.
The Consumer Review Fairness Act & Legal Precedent
In September 2016, the House passed H.R. 5111, otherwise known as the Consumer Review Fairness Act, which works:
“To prohibit the use of certain clauses in form contracts that restrict the ability of a consumer to communicate regarding the goods or services offered in interstate commerce that were the subject of the contract, and for other purposes.”
In layman’s terms, it makes the use of consumer-focused anti-disparagement clauses (commonly called gag orders) illegal, cancels out any existing anti-disparagement clauses in place, and gives the FTC authority to take action against companies that use them.
In addition to the laws themselves, it’s also important for issues like these to be settled in favor of consumers once they’ve made their way through the court system.
Here, a legal precedent (formally known as stare decisis) is set. Then, if a similar issue makes its way to the courts weeks, months, or years later, judges will look back on these cases as a guide on how to rule.
From this perspective, the judge overseeing the case of the TX pet sitting company who slapped a former customer with a $1 million lawsuit after they left a 1-star review on Yelp recently found the clause unenforceable.
Another high-profile non-disparagement case involving online retailer KlearGear, who fined a couple $3,500 for leaving a negative review, was ordered in court to pay $306,750 in compensatory and punitive damages.
Since the Consumer Review Fairness Act recently passed, some non-disparagement clauses are likely to remain in place as companies attempt to catch up compliance with the law. In the meantime, is there anything that can help you identify one before signing on the dotted line?
How Can You Identify an Anti-Disparagement Clause?
Throughout the world of consumer products and services, you’ll frequently encounter standard legal wording that’s intended to outline one point or another.
For example, have you ever noticed the following wording on a nutritional supplements website?: “This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.”
You’ve probably even encountered simpler ones like, “Terms and conditions may apply,” or “past performance does not guarantee future results.”
The point is this: Unlike these examples, there isn’t any standard wording to look out for when trying to identify an anti-disparagement clause.
To outline what I mean, here’s the language found in an apartment complex lease:
“Applicant will refrain from directly or indirectly publishing or airing negative commentary regarding the Unit, Owner, the property, or the apartments,” reads the addendum. “This means that Applicant shall not post negative commentary or reviews on Yelp!, Apartment Ratings, Facebook, or any other website or Internet-based publication or blog.”
Another from an online retailer:
“You agree not to file any complaint, chargeback, claim, dispute, or make any public forum post, review, Better Business Bureau complaint, social media post, or any public statement regarding the order, our website, or any issue regarding your order, for any reason, within this 90 day period, or to threaten to do so within the 90 day period, or it is a breach of the terms of sale, creating liability for damages in the amount of $250, plus any additional fees, damages – both consequential and incidental, calculated on an ongoing basis.”
On the other hand, here’s a much shorter version of a 2015 case involving a wedding company:
“By signing this contract, you are agreeing that you will not make or encourage any disparaging comments about OWPR ever in any form verbal or written.”
Despite the differences in their overall wording, though, you’ll find that many of these clauses share specific terms, such as “negative,” “complaint,” “comment,” and of course “disparagement” or “disparaging.”
As a result, you can search for these terms in the company’s contract by pressing Ctrl + F (Cmd + F for Mac users) and then entering it into the search field if you’re searching online.
If you have a had copy in front of you, though, you’ll likely just have to roll up your sleeves, read through the documentation manually, and keep and eye out for these terms.
What’s the Bottom Line About Anti-Disparagement Clauses?
Here at HighYa, we often find ourselves at the intersection of consumers and businesses. In other words, we provide shoppers with unbiased information about products, as well as a place where businesses can directly interact with their customers and solve their problems.
As a result, we understand that companies want to protect their reputation from false reviews and negative feedback. But we also recognize that consumers have the right to express their honest experiences and opinions, without the threat of legal recourse.
In the end, though, anti-disparagement clauses might not accomplish anything for either party. They rob consumers of their right to free speech, while giving companies who use them a deservedly bad reputation (after all, would you want to purchase from a company which limits your ability to criticize their performance?), thereby impacting their business.
Fortunately, based on legal precedent and the recent passage of the Consumer Review Fairness Act, it appears we’ll all be dealing with anti-disparagement clauses less and less as time goes on.
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