By Talia Loucks

This past season of South Park featured an episode entitled “You’re Not Yelping” where Yelp reviewers took over the town, putting folks out of business with their bad reviews. As always, South Park provided a humorous commentary on the current issue many companies face: one or two negative reviews can severely damage business. Many businesses have come up with a way to combat this: anti-disparagement clauses.

An anti-disparagement clause can be tucked into a contract to keep people from sharing negative opinions or experiences they have had from a company. These clauses do not attack false negative reviews—companies can already seek remedy for them under intentional tort law. But, these anti-disparagement clauses keep consumers from sharing their actual, truthful negative experiences.

One small pet-sitting business smacked a Texas family with a $6,766 lawsuit for a bad review on Yelp. In New York, two brothers who rented a home for a vacation rental removed their negative review from TripAdvisor after the owner called and demanded it be taken down. Both contracts contained anti-disparagement clauses.

The immediate thought for many in all of this is: what about the First Amendment? Unfortunately, First Amendment’s freedom of speech protection only applies to government conduct. Since these are private entities contracting, the government is not limiting anyone’s speech. Instead, people are contracting away their free speech, whether they are aware of it or not.

So, the government has decided to step in. The Consumer Review Freedom Act passed unanimously in the Senate this past December and is now making its way to the House. If passed, the Act would make anti-disparagement clauses void. The Act imposes penalties and fees upon individuals who impose such clauses. And, if a company were to take down a negative review, it would be required to return the intellectual property rights to the original creator. Thus, the individual writing the review retains control over publication.

Companies that provide platforms for people to write reviews are on the side of consumers. TripAdvisor’s head of global product appeared at a congressional hearing speaking against “unscrupulous business owners seeking to eliminate transparency in the marketplace… It is completely against the spirit of our site for any business owner to attempt to bully or intimidate reviewers who have had a negative experience.”

Those that support non-disparagement clauses claim that they are needed to protect their business. However, the evidence is not in their favor. Just last year, California implemented a law banning the state’s businesses from forcing consumers to comply with anti-disparagement clauses. There have been no reports of businesses going under because of this new law.

Furthermore, anti-disparagement clauses can be bad for business. How would companies ever improve their services if they never received any negative feedback? Brian Sparker, head of content marketing at ReviewTrackers, a reputation-management company says, “[a]ny sort of a gag clause in a contract is a bad idea,” he goes on to say that online reviews are one of the best ways businesses can improve customer experience.

Companies should not run from bad Yelp reviews in fear, but instead should use them as a way to improve their services. The Consumer Review Freedom Act supports freedom of speech, freedom of contract, and most importantly encourages businesses to continually improve. Improved customer experience generates positive reviews, and positive reviews create more business. The freedom to provide honest feedback to companies is good for all involved, despite what happened in South Park last season.

Image source: southpark.cc.com.