‘Nondisparagement’ clauses attempt to muzzle consumers

If you posted a bad review of the Bates Motel on TripAdvisor because you found a dismembered corpse in the bathtub, wouldn’t you be outraged to find a letter from a lawyer demanding that you either retract the review or pay $3,500? That prospect arises out of “nondisparagement” clauses, the newest “contract of adhesion” terms that plague travelers around the world.

Judge Thomas Dickerson, one of the country’s leading experts on travel law, recently published an article about the consumer implications. The problem starts when a hotel, restaurant or some other business adds fine print allowing it to bill you if you submit a disparaging review. One such contract reads this way (as reported in consumerist.com):

“In an effort to ensure fair and honest feedback, and to prevent the publishing of libelous content in any form, your acceptance of this sales contract prohibits you from taking any action that negatively [affects] (company), its reputation, products, services, management or employees. Should you violate this clause, as determined by (company) in its sole discretion, you will be provided a seventy-two (72) hour opportunity to retract the content in question. If the content remains, in whole or in part, you will immediately be billed $3,500.00 USD for legal fees and court costs.”

Consumerist noted another contract that called for a fine of $250 for just threatening to file a bad review.

Although good sense doesn’t always prevail in California, it did in this case. Gov. Jerry Brown signed a new law outlawing nondisparagement clauses. Moreover, two California congressmen, U.S. Reps. Eric Swalwell and Brad Sherman, introduced a “Consumer Review Freedom Act,” to prohibit the practice nationally — a bill likely to face an uncertain future in the new Congress.

Meanwhile, if you write a bad review, you might be billed. As far as I can tell from the material posted on Consumerist, you’re more likely to face a problem if you make a statement of material fact, subject to proof, than if you merely submit an opinion.

Websites that post reviews have also been targeted. The typical outcome, however, is removal of an offending review rather than any payment by the website operator.

Nondisparagement clauses are another example of a serious burden on consumers: contracts of adhesion. Such contracts include fine print saying that if you buy our product or service, you are obligated to adhere to all the terms of the contract, even though you had no opportunity to negotiate any specific terms. These requirements are buried deep in the fine print of a seller’s website, in an area where few customers would ever wander. But they become part of the contract, nevertheless. Beyond nondisparagement clauses, many travel suppliers include either or both of two particularly onerous terms:

Forum clauses: contractual language that limits the courts where you can sue the supplier. Some limitations are geographical — a cruise line that limits lawsuits to a Florida court, for example — others limit actions to federal courts, which are notoriously less friendly to consumer suits than state courts. In the worst cases, with a foreign-based supplier, your right of legal recourse is limited to action in the supplier’s home country, where consumer protections may be close to nil.

Compulsory arbitration: a requirement that, in the event of a dispute, you relinquish your right to file a lawsuit and instead agree to submit the dispute to a professional arbitrator — a venue far less likely to protect consumer interests than a court of law.

Presumably, if you’re caught in a problem resulting from an outrageous contract demand, you can always ask a judge to invalidate the offending part of the contract. As a nonlawyer reading some of the legal background, however, my take is that courts around the country are inconsistent — even capricious — in whether or not they enforce these various limitations and requirements.

I wish I had more specific consumer recommendations about protecting yourself, but the best I can do is “if you figure on posting a bad review, get proof and take pictures.” And, if necessary, get a good lawyer.