A Blog by Jonathan Low

 

Sep 11, 2014

New California Law Protects Right of Customers to Post Negative Reviews; Outlaws Business Attempts to Penalize Them

The conflict over whose rights are paramount continues.

California has just passed a law protecting the right of customers to post negative reviews of whatever services they receive and it prohibits the imposition of fines or other penalties by the enterprises who feel violated.

California is but one state out of 50, but then it is rather a special place, even if it were not the home of Google, Facebook, Amazon and much of the social media industry. That specialness resides in the strength of its economy, its history of innovation and its power as a bellwether of change. Though somewhat eroded over the years, California retains both the substance and the aura of a place where the future is distilled and repackaged for the rest of the world.

So the fact that its legislature passed legislation which its governor signed into law signifies that the rights of the consumer appear, at least in this instance, to be superior to those of the businesses which must endure the frequently unkind, often unfair and sometimes grossly untrue comments about the quality of whatever they attempt to offer. Which may or may not be a positive from an economic standpoint because of the conflict between the theory that honest feedback improves the market and the reality of how that feedback impacts their prospects. JL

Jeff Roberts reports in GigaOm:

Businesses may not impose contract terms “waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.”

A swanky hotel in New York caught flak this summer for threatening to fine brides $500 if any of their wedding guests posted a negative review on social media. In that case, the hotel backed down, but that doesn’t mean other businesses aren’t trying the same trick: stuffing so-called “non-disparagement clauses” into customer contracts in order to muzzle online criticism.
This explains why Governor Jerry Brown of California signed a law this week that will turn the tables on such businesses, by fining them up to $10,000 if they use contracts that prevent customers from expressing their opinion about a good or service online.
The law is a victory for consumers’ free speech rights, and comes after repeated instances of merchants trying to collect penalties of thousands of dollars from customers who criticized them. In one notorious case, a Utah couple received an email from an online retailer saying they would have to pay $3,500 unless they removed a comment they had posted to the review site, RipoffReport.com.
The text of the law is straightforward, and says businesses may not impose contract terms “waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.”
The law, which is the first of its kind in the U.S. and was reported by the LA Times, goes into force in California in 2015.

2 comments:

Epic research said...

An economics of priceless might help find a way to get out of this bind.

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