How One Couple Fought For The Legal Right To Leave A Bad Yelp Review

Dec 18, 2016
Originally published on December 19, 2016 9:19 am

The story of a new law starts with some online Christmas shopping gone wrong.

In the winter of 2008, John Palmer of Layton, Utah, decided to buy his wife, Jen, a couple of holiday tchotchkes. Things like desk toys and keychains.

The order, from the online retailer KlearGear, never arrived.

After a testy back and forth with the company's customer service, Jen Palmer did what many thousands of consumers do every month: She posted about her negative experience on an online business review site.

"I posted the review and then we forgot about it," she says.

But four years later, they received an email from the company demanding they take the review down. The company said they had violated a "non-disparagement" clause in the terms of service — a caveat in the fine print that restricts customers from publicly reviewing their experience with the company.

The company said the Palmers would be subject to a $3,500 fine if they didn't comply.

The Palmers refused to take down the review or pay the fine. A few months later the couple found their credit had taken a major hit — KlearGear had passed the fine on to a collection agency and reported it to several credit bureaus as an unpaid bill.

They went to the press and found legal representation from Public Citizen, a consumer rights advocacy group.

"The purpose of a non-disparagement clause is to have a hammer with which to hit consumers who haven't said anything false," says Paul Levy, a lawyer with Public Citizen. "But you can make them take it down, and you can seek damages, you can seek attorney's fees, what might you."

Levy says gag clauses like these can limit truthful speech and deprive consumers of valuable information when choosing where to spend their money.

After a lengthy legal back and forth, the Palmers won a default judgment in federal court and their credit was restored.

But their case was an extreme example.

"Surely 95 percent of the time consumers simply remove the review, rather than stand behind their words, in order to avoid any potential legal action," says Eric Goldman, a law professor at Santa Clara University School of Law.

He says it's likely that the use of these gag clauses is much more widespread than it appears.

"So the number of lawsuits are fairly rare because there's a much larger group of reviews that have been removed under the threat of lawsuits," Goldman says.

The KlearGear case attracted media coverage around the country and helped gain the attention of legislators. California passed a law outlawing the use of non-disparagement clauses to limit customer reviews in 2014. Online review platforms like Yelp and TripAdvisor joined the effort to pass federal legislation.

It culminated last week, when President Obama signed the Consumer Review Fairness Act into law after it passed unanimously in the Senate last month. It prohibits businesses from putting non-disparagement clauses into terms of service.

Those clauses "will not work in court. And they will expose the business that tries to use those techniques to potential liability," Goldman explains. He points out that under the law, businesses will still have the ability to combat false reviews through defamation law.

Not everyone is happy about the new law, however. Joe Sullivan, an Atlanta business attorney who regularly advises businesses on how to deal with negative online reviews, says he's heard some pushback from businesses, none of whom wanted to speak on the record.

"It wasn't necessarily a solution in search of a problem," he says, "but it was something where it wasn't a widespread practice." Sullivan says there wasn't much incentive for companies to use this kind of fine print to sue customers.

He says some businesses view the law as an effort by consumer review sites to grow their customer base.

Despite the concerns of some businesses, Jen Palmer is happy that the new law means customers like her will not face legal retaliation in the future.

"I'm very glad to hear that this seems to be the one thing that Congress can agree on," she says. "I'd definitely call it the best Christmas present of all, to make sure that nobody else has to go through this."

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MICHEL MARTIN, HOST:

Have you ever left a comment on an online review platform? For many people, leaving and reading comments is an essential part of navigating the modern marketplace. But negative comments have sometimes led to legal trouble. On occasion, some people have actually been fined or sued by businesses after leaving negative reviews, but a bill signed into law by President Obama on Thursday is meant to put an end to that. As NPR's Alexi Horowitz-Ghazi reports.

ALEXI HOROWITZ-GHAZI, BYLINE: This story starts with some online Christmas shopping gone very wrong when in the winter of 2008, a guy named John Palmer of Clayton, Utah, decided to buy his wife, Jen, a couple of holiday tchotchkes from an online retailer called KlearGear.

JEN PALMER: Just some little desk toys, key chains, little nerdy things like that.

HOROWITZ-GHAZI: But Jen Palmer says the gifts never arrived, and after a testy back and forth with the company's customer service, she did what many thousands of consumers do every month. She posted about her experience on an online business review site.

PALMER: I posted the review, and then we forgot about it.

HOROWITZ-GHAZI: But four years later, the Palmers received an email from the company...

PALMER: Saying that we had violated their non-disparagement clause and that we were now subject to a $3,500 fine if we didn't take the review down.

HOROWITZ-GHAZI: A non-disparagement clause. That's a caveat in the fine print of a company's terms of service restricting or barring customers from publicly reviewing their experience with the company. The Palmers told KlearGear they wouldn't be taking down the comment or paying the fine.

PALMER: All we did was tell the truth, and you don't get to fine us for this.

HOROWITZ-GHAZI: But a few months later, the couple found out their credit had taken a big hit. KlearGear had passed the fine onto a collection agency as an unpaid bill. The Palmers went to the press, and they eventually found legal help. Paul Levy is a lawyer with Public Citizen, a consumer rights advocacy group that agreed to represent the Palmers in court.

PAUL LEVY: The purpose of a non-disparagement clause is to have a hammer with which to hit consumers who haven't said anything false, but you can make them take it down or you can seek damages, you can seek attorney fees, what might you.

HOROWITZ-GHAZI: Levy says these so-called gag clauses can limit truthful criticism and deprive consumers of valuable information.

LEVY: They put a thumb on the scale of the marketplace of ideas.

HOROWITZ-GHAZI: After a lengthy legal back and forth, the Palmers won a default judgment in federal court and their credit was restored. We tried to reach KlearGear for comment, but phone calls weren't answered and a link on the website to contact the owners about non-disparagement issues was broken. The Palmer's case helped to bring the issue publicity. Online review platforms like Yelp and TripAdvisor soon joined the effort to help pass federal legislation.

And this week, the president signed the Consumer Review Fairness Act into law. It prohibits companies from restricting their customers' right to review. Interestingly, there hasn't been much pushback. The rare bipartisan bill passed unanimously in the Senate last month, and business associations we reached out to said the issue simply wasn't on their agenda.

JOE SULLIVAN: It wasn't necessarily a solution looking for a problem, but it was something where it wasn't a widespread practice.

HOROWITZ-GHAZI: Joe Sullivan is an Atlanta lawyer who advises businesses on how to deal with negative customer reviews. He says the lack of public opposition is likely because most businesses haven't ever considered using gag clauses in this way. He says he's heard muted pushback from some in the business community, but that for most businesses fighting to restrict customer reviews wouldn't be worth the bad publicity.

He also points out that businesses will still have the ability to combat false reviews through defamation suits. As for Jen Palmer, she's just happy to have moved on from her legal fiasco. She never got her desktop tchotchkes, but, she says, this Christmas she got something even better.

PALMER: I definitely call it the best Christmas present of all to make sure that nobody else has to go through this.

HOROWITZ-GHAZI: Still, she says, it never hurts to read the fine print. Alexi Horowitz-Ghazi, NPR News.

[POST-BROADCAST CORRECTION: In the audio of this story, as in an earlier Web version, we mistakenly refer to Layton, Utah, as Clayton, Utah.] Transcript provided by NPR, Copyright NPR.