Almost all business owners have been there before: an unhappy customer took his or her complaints online and now you’re left to deal with the fallout.
More and more, online reviews and star-ratings are becoming the sources customers check when deciding where they will bring their business. In 2011, a study from Harvard Business School found that the number of stars restaurants have on their Yelp profiles closely correlates to the amount of business they receive, so much so that restaurants with one-star increases saw between five and nine percent more revenue.
Just as positive reviews can have their rewards, negative reviews can break a business. Sure, these complaints can be maddening, but when do negative reviews warrant legal action? The answer to this question typically boils down to whether the review expresses an opinion or challenges a fact.
Opinions Are Protected Under the First Amendment
In most cases, negative reviews express customers’ opinions, which are protected under the First Amendment. So, the most important thing to ask yourself before considering legal action is: does the review reflect the customer’s personal experience and consequential opinion of my business? If so, it’s not likely that you would be able to sue over the negative review, or that you would be able to win your case if you did take legal action.
Yet, there have been cases where business owners mistook opinions for fact and sued the reviewers. For example, in 2009, a plastic surgeon sued three of his former patients after they allegedly left defaming reviews about his work on Yelp and CitySearch.com. In one lawsuit, the doctor alleged that the following review defamed him and his business:
“Very bad plastic surgeon, avoid him at all costs, please!… My girlfriend and her sister both went to this horrible man on the same day for cosmetic surgery, they both had horrible results. Due to the nature of the surgery, whenever they went to him for post-operative visits, he shrugged off their concerns with… “Oh, no it’s too soon to see the results,” and he would literally walk out the door…They both have to have surgery again to fix his horrible, disfiguring work…He actually pretended [for] one year after their surgeries that they looked great! Liar!”
Even though the patient posed as a different person when writing her review, she defended the comments as an expression of her opinion. In her reply to the lawsuit, she claimed that the phrases “very bad plastic surgeon,” “shrugged off their concerns,” and “liar” were subjective because they could not be proved to be true or false and, therefore, should be protected under her First Amendment rights. Furthermore, she likened the lawsuit to a SLAPP (strategic lawsuit against public participation) suit, which many states regulate out of fear that companies will use them to censor and intimidate unhappy customers. In the end, the suits may have been SLAPP suits after all, as they were all voluntarily dismissed.
What About Non-Disparagement Clauses?
It’s true that some businesses implement non-disparagement clauses in their terms and conditions agreements. These clauses are typically designed to prevent customers from publishing negative reviews and give business owners the right to fine those who violate the agreement; however, they often spur negative backlash from customers, as well as the occasional lawsuit.
Take online retailer KlearGear.com, for instance. In 2012, two customers sued the website after being charged $3,500 for writing negative reviews online, which the company said was in violation of its non-disparagement clause. According to the lawsuit, the clause wasn’t in place when the reviews were written, but the company still tried to impose the fee and then reported the customers to debt collection agencies.
Let this lawsuit be a cautionary tale. In 2013, KlearGear.com was ordered to pay more than $300,000 in compensatory and punitive damages to the customers, which was on top of the already massive amount of backlash the company received after word of the lawsuit spread.
Reviews Making Factually Incorrect Claims May be Grounds for a Lawsuit
If you believe that the negative review borders on factually incorrect territory, then you may be able to file a lawsuit if your company suffered damages (e.g., lost business, harassment, tarnished reputation, etc.) directly resulting from the libel (written defamation) or slander (spoken defamation).
These lawsuits have been on the rise and, most recently, a homeowner was ordered to remove and edit certain reviews she left on Yelp and Angie’s List because they were found to be defaming. In this lawsuit, construction company Dietz Development alleged that homeowner Jane Perez cost the company more than $800,000 in job opportunities because she allegedly tarnished the company’s reputation by publishing factually incorrect reviews. Dietz Development alleged that Perez was unhappy with the work performed in her home and refused to pay the $13,000 bill, so the construction company sued her for the payment and Perez took her complaints online. According to the lawsuit, the following review damaged Dietz Development’s reputation:
“My home was damaged; the ‘work’ had to be re-accomplished; and Dietz tried to sue me for ‘monies due’ for his ‘work.’ I won in summary judgment (meaning that his case had no merit). Despite his claims, Dietz was/is not licensed to perform work in the state of VA…Today (6 months later) he just showed up at my door and ‘wanted to talk to me.’ I said that ‘I didn’t want to talk to him,’ closed the door, and called the police… This is after filing my first ever police report when I found my jewelry missing and Dietz was the only one with a key.”
In the lawsuit, Dietz Development argued that these comments were factually incorrect. First, the company claimed that the initial lawsuit was dismissed with prejudice because the company’s owner, Christopher Dietz, missed the filing deadline – not because the case didn’t have any merit. Then, the company argued that the work performed at Perez’s home did not require a state contractor’s license, and pointed out that the company always follows licensing laws, because it is fully licensed to do work in Maryland and Washington, D.C.
Finally, the company claimed that Perez falsely insinuated that the company was responsible for the missing jewelry; however, the homeowner allegedly told Christopher Dietz that she did not believe he or his workers had anything to do with the theft and, in fact, found some of the missing pieces after calling the police.
In the end, Dietz Development had a good case against Perez for posting the negative review; however, the company was not awarded any requested damages, because the judge found that Christopher Dietz published equally defaming responses about Perez when he wrote, “if theft was made, it was her stealing services and money from me.” While it may not have been meant as a serious accusation of theft, the judge found that both parties were defamed and the judge did not award Dietz Development any compensation for its losses.
So, the moral of the story is that unless you’re Botto Bistro – the Italian restaurant that’s making headlines for its new “Hate Us on Yelp” campaign and reportedly doing better than ever – reviews and star-ratings serve as an important reflection of a business, and they can make a big difference.
Remember, when you find a negative review about your company, the most important thing to do is address the problem. Filing a lawsuit against your customer should be reserved for exceptional cases, and only in the event that a statement challenges an actual fact and costs your company business.
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