Dive Brief:
-
California governor Jerry Brown has signed into a law a prohibition against companies levying fines against customers who post negative reviews. The law goes into effect next year.
-
Several companies have been attempting to include so-called non-disparagement clauses that force customers to agree to terms that include sometimes hefty fines if they make complaints public. Starting next year in California, any company trying that could face a $2,500 fine for a first violation, and $5,000 for subsequent ones.
-
Even without legislation like California’s, such clauses have been successfully challenged in court.
Dive Insight:
The most infamous case of non-disparagement clauses is probably that of e-commerce site KlearGear, which attempted to charge customers who had publicly aired their complaints about the company on an online review site $3,500 for each bad review. That backfired on the company after a court turned that around and ordered KlearGear to pay the customers $300,000, after years of legal back-and-forth. This law clarifies things by sweeping away the ability to insert such clauses into any agreement to which customers must agree in order to buy goods or services.