A non-disparagement clause is any clause in a legal contract that prevents someone from talking negatively about a certain subject in public. These clauses have their place in certain areas of the law, like employment contracts for actors who will be expected to tell reporters about their experience on the job. But with the rise of online review sites, non-disparagement clauses are showing up in all sorts of contracts between small business owners and their clients.
Small businesses live and die by their reputations
As online reviews have become the go-to source of information about the quality of a business’s customer service, products, location and more, business owners have found that their ranking on sites like Yelp and Google can drive more customers to their businesses—or push them away entirely. Ethical businesses drive up their ratings by providing consistently good service and responding to concerns promptly, but unethical companies have been trying to game the system with contracts that prevent unhappy clients from saying anything negative about them online. The most egregious examples of non-disparagement clauses prohibit customers from telling their story to anyone at all—which means that customers who sue over defective or missing products can’t even tell their stories to a jury.
Watch out for unethical attorneys
If you’re considering being represented by an attorney, read any contract they give you carefully. While California has banned non-disparagement clauses in consumer contracts, they remain legal in most states. You don’t want to be represented by an attorney who is afraid of publicity. Good attorneys trust that they have provided you with the best service possible and will encourage you to give honest feedback.
Is change on the horizon?
The Consumer Review Freedom Act, which would prohibit the use of non-disparagement clauses in certain types of contracts between clients and businesses, was referred to a congressional committee on September 16, 2015. If this bill passes, unethical business owners will no longer be able to muzzle fair reviews of their services. Until then, read every contract carefully before you sign it, and don’t trust an attorney who isn’t confident enough to let his or her reputation stand on its own.