Better Ways than Non-Disparagement Clauses to Handle Negative Online Reviews

Online reviews have a major effect on buying decisions. There’s just no doubt about that. That’s why businesses strive to promote positive comments and monitor comment boards in order to quickly respond to negative reviews.

Some businesses have tried to prevent negative reviews by slipping non-disparagement clauses into customer contracts. The clauses forbid customers from writing negative reviews online on the pain of steep financial penalties.

Not surprisingly, disgruntled customers dislike the clauses. At least some U.S. Congressmen also disdain the provisions. Four representatives recently introduced the Consumer Review Freedom Act, otherwise known as the “Yelp” bill, that would ban companies from penalizing customers who write negative reviews on Yelp or other review boards. The bill would declare the contracts unenforceable and would authorize the Justice Department and state attorneys to take action against businesses that include them.

“Consumers shouldn’t have to worry about being punished for posting an honest review,” states Eric Swalwell (D-CA), one of the bill’s sponsors. “This is commonsense bipartisan legislation to ensure the rights of consumers are protected and businesses are prevented from silencing fair criticism.

Non-disparagement provisions are common in employment contracts and lawsuit settlements. When included in consumer contracts, they are something else. Because the clauses are relatively new for consumer contracts, case law is scanty and their legality is unclear. They are already unenforceable in many states. California Governor Jerry Brown signed into law a bill making non-disparagement clauses illegal in the state last year.

The Notorious KlearGear Case

The KlearGear case is probably the most notorious example of the provision. John Palmer bought his wife, Jen, Christmas gifts on KlearGear.com in 2008. The items never arrived and the PayPal transaction was automatically canceled. Jen posted a review on ripoffreport.com, saying she found it impossible to reach anyone at KlearGear.com. The company emailed them three years later, saying they would be fined $3,500 if they didn’t remove the post within 72 hours.

When they refused to pay, the company reported their debt to credit bureaus, which damaged their credit rating. The couple then sued and a Utah court ordered KlearGear to pay them $306,750 in damages. As the Consumerist notes, it’s not clear if the company will pay up.

A PR Disaster

Not surprisingly, the case caused a public relations disaster for KlearGear. Following media stories, an upwelling of indignation prompted the company to protect its Twitter account and shut down its Facebook page, Tech Crunch reported. The entire incident was a case study in how not to respond to customer complaints.

Shore Dream Vacation Rentals provided a better response. When CNN reported its contract provision that threatened fines up to $10,000 for negative reviews, the company quickly removed it. A spokeswoman told CNN the clause was intended to protect it from customers who demand compensation by threatening unreasonable negative reviews after leaving a vacation unit. The company, she added, never used the clause to fine a customer.

Effective Way to Handle Online Complaints

The solution for businesses is to:

• Employ a social media monitoring service to immediately spot online comments that require responses. The faster you address a complaint, the better the chances you can convert that angry customer into a passionate fan. Conversely, the longer a complaint sits, the more likely it will attract more complaints and turn into a crisis. [Monitoring social media comments can show product managers what improvements customers would like to have in products and services.]

• Try to move the conversation offline to avoid a back-and-forth, tit-for-tat conversation in public. Ask them to email, call or to send a private message. That creates the appearance that you’re striving to resolve the problem.

• Find out what happened to cause the complaint. Use your media monitoring service to determine if that customer has written about the experience on other sites or if a blogger mentioned the review.

• Thank the customer. No matter how negative the comment, thank the customer for bringing the problem to your brand’s attention.

• Show respect. Keep in mind the conversation is public; so losing your temper will only damage the brand’s reputation further. When social media service agents are helpful and courteous, it makes rude reviews look childish and reflects well on your brand.

• Correct misinformation. If commenters jump to the wrong conclusion about your company, kindly correct them with the proper information and thank them for the feedback.

• And of course, provide high-quality products and superb customer service.

Legal recourse may be considered as a last resort if the review is defamatory and dishonest. Using non-disparagement clauses to place legal restrictions on free speech simply doesn’t work.

Bottom Line: Non-disparagement clauses stand on questionable legal grounds and can prompt a public relations crisis. A better solution is to quickly identify complaints through social media listening and attempt to resolve issues through excellent customer service.