As a California attorney and even as a layperson, I know that the Golden State sets the trend when it comes to regulations and many other states, or even the feds will soon follow in lockstep. Despite federal laws making it easy to defame people online, California has said: “hold on a minute.” A little background is in order here. We all know the influence and prevalence of social media in our modern lives. People who use internet a lot, are even more influenced by what is posted on social media on a daily basis. Internet is affecting directly on our lifestyles, buying patterns, fashion choices etc.
At the same time, we feel freer than ever on the internet when it comes to expressing ourselves and trash talking. We can talk about people, companies and things the way we want on internet. Social networking platforms, blogs, forums, reviewing websites etc. are all places where we can easily share our thoughts and interact with people. We can tell people that us lawyers are scumbags and they can even make up stuff from a false account and put us attorneys out of practice if they really trash us well.
How Powerful Have Online Reviews Become?
As discussed, while posting our thoughts on various things we have reached a point as consumers that we can make a business popular or a business owner bankrupt with our reviews. Many online reviews left by consumers on reviewing websites have recently become the cause of legal trials. What consumers said about a particular product or service of a company sounded so offending to companies for which these reviews were written that seeking legal help and suing the consumers seemed the only way for them to get justice.
A Recent Example Of Litigation Due To Online Review
A homeowner in Fairfax County, Virginia, was sued by her contractor who was supposed to make improvements to her newly purchased home. The consumer had posted a negative review about the contractor’s work and gave only 1 star to express her dissatisfaction from the services she had received. In addition to that, the homeowner, named Jane Perez, also claimed that some expensive jewelry items could not be found after the contractor left the house. The case was filed by Christopher Dietz, the contractor, for unnecessary defamation of his business for an amount of $750,000.
The case went to the court but the decision was finally split and none of the party was granted any compensations. However, the contractor had to pay for the litigation costs and these costs were big since he had to go to several attorneys to fight his case. In addition to that, he lost a lot of money because of the defamation from the consumer. According to the contractor he had lost nearly $500,000 in business because of the libeling from the consumer. The consumer, Jane Perez, was lucky in this particular scenario as she was helped by an attorney on a pro bono basis.
Companies Trying To Fight Back
After many scenarios that emerged similar to the one mentioned above, companies thought of an ingenious method of fighting back. Many online companies and contractors that provide certain services and products started to throw in a non-disparagement clause in their policies and customer contracts. This particular clause prohibited the consumers from defaming the companies in their online reviews and through other methods. In short, this clause prevented the consumers from expressing their feelings about a particular service or product that they had used. A case actually happened where such a clause was violated by a couple.
A famous online retail store troubled a couple because they had posted an online review that was defaming for the business. The retailer had the non-disparagement clause added to its policies and after the couple had posted the negative online review the retailer demanded $3,500 from the couple. The retailer went so far as to reporting the non-payment of this money as debt and causing a big dent on the credit score of the consumer. This caused trouble to the couple who then sued the retailer and won a case for a compensation of $300,000 for the damages done.
The First Amendment Rights
The first amendment in the constitution of the United States prohibits the making of any law that bars the people of the US from having the right of free speech. In simple words, the public is free to speak its mind and creating a law that represses the people from having freedom of speech is not allowed.
Actions Taken By The State Of California
Based on the events stated above and after knowing the frequency of such cases, there was a new law made in the state of California. This law has been written for protecting the first amendment right of the consumers that was being taken away by companies and online merchants through non-disparagement clause in their policies. According to this law the companies cannot force their consumers to sign any contracts that have clauses that deprive the consumers from their first amendment right. This law has been signed by the governor and has already been put in effect on January 01, 2015. Currently, the law has been named as the Yelp Bill.
Merchants, service providers, contractors, retailers etc. who’d violate this law will have to pay $2500 for first violation. For any violations done after the first one they have to pay $5000. The fine can be as big as $10,000 if the violation is done deliberately and recklessly.
What To Learn From This?
The online retail stores and other businesses must make sure to stay in compliance with the latest changes in the laws so they don’t end up having policies that are in conflict with the existing law. As for consumers, there are two important things to learn from this.
- Make sure you review in detail your homeowners’ policy or any other type of insurance. Many insurance providers now cover the insured people for cases where a company sues the consumer for libeling and defamation.
- Make sure you write your reviews honestly. Don’t add in details and occurrences that haven’t taken place because this could get you in trouble if the company sues you for defamation.
With the right insurance policy, discussed here, you can rest assured that even if you have to face such a situation you won’t have to pay the legal fees from your pocket. When it comes to business owners, they should ensure to stay updated with latest laws because they say, “care is better than cure”.
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