Regardless if you personally write reviews on Yelp! and other review-based websites or simply read through them on sites for guidance, reviews of companies and their services have been both a blessing and a curse for many small business owners. Consumers who feel that they have been cheated or have received poor service, utilize these websites to voice their opinions. Businesses retaliate by using “non-disparagement” provisions in their contracts with consumers in order to dissuade consumers from posting such critical comments.

Governor Jerry Brown passed legislation which stated that “contracts or proposed contracts for the sale or lease of consumer goods or services may not include a provision 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.” Cal.Civ Code Sec. 1670.8(a)(1). It will also be “unlawful to threaten or to seek to enforce” such a provision, or to “otherwise penalize” a consumer for making any such statement. Cal.Civ Code Sec. 1670.8(a)(2).

The new law also gives websites that host consumer reviews, such as Yelp!, protection against businesses seeking to sue simply for serving as a platform for the reviews. What this translates to is if you and a customer form a contract for an exchange of goods or services, you are not allowed to include any clause in that contract that limits your customer’s right to “free speech” about the services your provided. The concept behind the legislation is to allow customers to either rightfully warn potential customers if things went wrong with your service, or to praise your work.

These types of contracts or agreements can already be included in your website terms and conditions and you might not even know it! If you are a business who has significant online presence, contact us for a free review of your current click-wrap agreements, online terms and conditions, and/or contracts to make sure you are in compliance with these new requirements.818.956.9200

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Glendale, CA 91207

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Sherman Oaks, CA 91403