BBB Tip: Non-disparagement clauses erode customer confidence
Reviews are one of the biggest factors influencing whether prospective customers choose to do business with you. In hopes of maintaining their good reputation, some businesses include illegal non-disparagement clauses in their contracts or terms and conditions, prohibiting customers from public criticism. Businesses may even demand financial compensation if a customer fails to comply.
BBB warns that such clauses erode consumer trust and could land you in hot water with the Federal Trade Commission. Whether good or bad, honest reviews should be welcomed as an opportunity to build trust.
THE PROBLEM WITH NONDISPARAGEMENT CLAUSES
In 2016, the Consumer Review Fairness Act was passed in response to a rising number of businesses taking action against honest customer criticism. Non-disparagement clauses violate the CRFA, which “protects people’s ability to share their honest opinions about a business’s products, services, or conduct, in any forum, including social media.” In addition, businesses cannot impose fines or otherwise punish customers who engage in public criticism.
Prior to the act, some businesses sought harsh punishments against any review that painted the business as less than perfect. In one example, a vacation rental company “mandated in its contract that any vacationer who posted a review giving the property less than a “5 star or absolute best rating” immediately owed the company at least $25,000.” The company was forced to answer to the FTC for threatening customers with fines.
This illegal practice is deceptive on its own, since it bars customers from providing their honest opinions. Equally deceitful is the fact that many businesses hide non-disparagement clauses where customers are unlikely to see them, buried in the fine print of a contract or on web pages that people rarely visit.
Because non-disparagement clauses are illegal, dishonest and harmful to consumers, the practice is also directly opposed to BBB’s Standards for Trust. That means Accredited Businesses found prohibiting honest reviews could be at risk for losing their accreditation. Similarly, non-accredited businesses could be disqualified from consideration for accreditation.
THE IMPORTANCE OF HONEST CRITICISM
Open and honest communication is a necessary part of an ethical marketplace, in which both businesses and customers benefit from genuine customer reviews. When customers have access to honest reviews, they’re able to make informed decisions about where to spend their
money, and businesses have an opportunity to address their shortcomings, improve their reputation and rebuild trust.
TIPS FOR HANDLING PUBLIC CRITICISM OF YOUR BUSINESS:
• Respond promptly to negative reviews. Prospective customers consider the newest reviews to be the most relevant and accurate, and they could interpret a lack of response as a business’ lack of interest in a customer’s concerns. Consistently monitor reviews on various websites, so you can quickly respond to
negative comments.
• Be respectful when responding to negative comments. You should avoid making denials or excuses, even if you have a different perspective on the events. Acknowledge their concerns, apologize for the mistake and illustrate that you value customer feedback as an opportunity for you to improve.
• Tell the customer how to contact you. Responding online is important, but it can feel impersonal for the customer. When you talk to a customer one on one, they’ll know that you genuinely listened to their concerns. This also gives you a chance to reach a
resolution that makes both you and the customer satisfied.
Businesses can remove or prohibit reviews that are considered abusive, vulgar or threatening. The CRFA protects a customer’s right to leave honest reviews, but it does not protect reviews that could be genuinely harmful. For example, it does not permit reviews that reveal sensitive information about a business or its employees, nor does it permit inappropriate language like racial epithets.
• Encourage customers to leave reviews on BBB. org. At BBB, customers are able to post feedback about
marketplace experiences with businesses, brands and charities. Just like our complaints, reviews are vetted by BBB team members and sent to the business before they are published online.
To learn more about customer reviews, read next week’s column on the “The power of customer reviews on small businesses.” Thanks to BBB of Greater Maryland for their contribution to this tip.