Non-Disparagement Clauses – Don’t let the small print scare you

kleargearSo you bought a product online.  Maybe it didn’t arrive.  Maybe it didn’t work.  Maybe it wasn’t what you bargained for.  So you repeatedly called or emailed customer service and didn’t get a response and now you’re mad.  What to do?

Point in case: John Palmer of Salt Lake City placed a $20.00 online order with KlearGear.com. When the order did not arrive in a timely manner he contacted the company but could not get a response.  KlearGear.com eventually cancelled his order without explanation.  After the incident, Palmer’s wife decided to let their fellow Internet shoppers know that buyers should beware when shopping at Kleargear.com by posting a negative report on ripoffreport.com.  Three years later, KlearGear.com informed the Palmers that they had violated a non-disparagement clause hidden in the “small print” Terms of Use (that no one ever reads before clicking “yes” when buying something online). KlearGear.com instructed them to remove the disparaging statement or be subject to a $3500 fine. True to its word, KlearGear.com not only imposed the fine, but it reported this outstanding claim to credit reporting agencies, which negatively impacted the Palmers’ credit rating.

Here is an excerpt from KlearGear.com’s Terms of Usage:

In an effort to ensure fair and honest public 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 impacts KlearGear.com, its reputation, products, services, management or employees.

Make no mistake, non-disparagement clauses are highly unenforceable for a myriad of reasons:

  • If a vendor fails to deliver what was bargained for, they are in breach of contract and the contract will be voided.
  • In order for someone to sue you for libel, the published statement(s) must be false factual assertion of facts that results in harm to someone’s reputation.
  • Contract terms that are obviously one-sided, so one-sided that no reasonable person would agree to such terms, are not enforceable.
  • Consumers have a right to know whether a vendor is reliable and most often, customer reviews are the best way to ascertain this.
  • Non-disparagement clauses are normally bargained for, e.g., I will pay you in exchange for keeping your mouth shut. Here there was no such bargain.

Yet, non-disparagement clauses continue to pop up as Arthur Frommer recently spoke up about a ludicrous trend from some vacation rental vendors who slip non-disparagement clauses into contracts that effectively forbid you from writing bad reviews about their properties.

Is this Huxley’s Brave New World –a tragically misguided social experiment set in a controlled futuristic society — taken to new heights of depravity?

You could justify a great many denials of our First Amendment rights of free speech but, the First Amendment only protects people against government action restricting speech. So, the question becomes simply: what will it take to buy silence?

       Errr… How about …Good customer service? Providing the goods and services that were bargained for?  And doing so in a timely manner?

In summary, don’t let the small print scare you.  Companies that insist that you keep your negative comments to yourself are not ones you want to do business with. You are well within your rights to post an honest and accurate review of your shopping, vacation or other experiences. Sites like Angieslist.com and ripoffreport.com and complaints.com are in business for this very reason.  If an online vendor is threatening you, contact the Better Business Bureau or an attorney.

Some advice for e-retailers:

The backlash against KlearGear.com will likely cost the company its reputation –much more than the $3500 it sought to recover from the Palmers.  E-retailers should think carefully before adding non-disparagement language to their user agreements and understand that unreasonable terms and conditions may not only be unenforceable but they can create the impression of fraudulent, deceptive, or dishonest trade practices.

Advertisements

One thought on “Non-Disparagement Clauses – Don’t let the small print scare you

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s