Dealing with the Dangers of Online Reviewing

by Best Best & Krieger LLP
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The Press-Enterprise - July 13, 2014.

Law tries to find the line between protecting speech and punishing defamation

Online review websites, such as Yelp or Angie’s List, have become a common forum for griping. They give a voice to past customers to praise or condemn the efforts of a local business and inform future customers about which businesses in the community deserve their business, and which to avoid.

But what happens when fake “customers” post negative reviews, or real customers embellish the horror of poor service? Can reviewers be held liable for their disparaging comments, and what can businesses do to protect themselves?

The laws governing online reviews are quickly changing across the country and are pitting online reviewer anonymity and freedom to comment against businesses - both large and small - fighting to prevent false reviews and mitigate the impact of negative reviews on their online reputations.

Two recent Virginia cases helped set some legal ground rules regarding online reviews.

In one case, a woman was sued for $750,000 for lost business due to defamation after she wrote a scathing one-star review of a contractor, which included accusations of damage to her home, missing jewelry and an inflated invoice.

The court found that the woman made false statements and defamed the contractor, but also found that the contractor, in its online responses, also defamed the woman. No damages were awarded, but the precedent was established that a reviewer can be found liable for shooting off an exaggerated and harmful review.

In the second case, on more of a technical note, a Virginia court of appeal ruled that Yelp must reveal the identities of seven anonymous users who left negative reviews. Yelp has been opposed to giving information about its users, but the court found that the identities were needed to determine whether the users were actually customers of the reviewed business or if they were competitors or others writing fake reviews.

Although expressing one’s opinion online is a pastime of many and generally garners anonymity and free speech protection, reviews that include deliberately false statements of fact do not enjoy such protections and can lead to liability.

Similar litigation has sprung up across the country with mixed results. A California technology company won a $1.6 million judgment against a blogger accusing it of stealing money from its business partners.

Other cases have gone in favor of the reviewer. In 2011, a California court ordered a dentist to pay his patient’s medical bills after he attempted to sue the patient’s parents for posting a negative review on Yelp. The outcomes of these cases are largely due to the specific facts and events of each case, but as state laws are passed to deal with these situations, the outcome for a specific reviewer or business may depend, in part, where each party resides.

In California, current legislation is seeking to limit a practice of some companies of including provisions in the fine print of their contracts that prevent users from leaving negative reviews online. The bill was in response to a Utah case in which a couple was charged $3,500 for posting a negative review in violation of a provision in the terms of service.

The items reviewed cost less than $20 and, when the customers refused to pay the $3,500 fee, the company reported the unpaid amount to the credit reporting agencies.

California Assembly Bill 2365 would make it unlawful to threaten or seek to enforce any provision in an agreement that requires a customer to waive his or her right to make statements about the consumer’s experience with a business. The bill would impose fines against businesses that threaten to, or attempt to, enforce this sort of gag order provision, unless the provision was clearly and conspicuously identified and agreed to in the contract. Numerous articles, blog posts and consultants give good advice about how to protect oneself as a reviewer or as a business owner when interacting online. In the face of rapidly changing laws, reviewers will benefit from sticking to truthful opinions in their online reviews and businesses will benefit from creating a plan on how to best engage their customers online that includes some preparation to suffer through, or proactively address, the inevitable fake or false review.

* This article first appeared in The Press-Enterprise on July 13, 2014. Republished with permission.

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