The days of silencing customers with a “gotcha” contract are numbered

By | January 17th, 2016

If he reveals the details of his awful vacation-rental experience, Terry Fedigan is afraid of what might happen. The rental property’s owner could sue — and win.

Last summer, he rented a home in New York’s Catskill Mountains with his brother. “We were not satisfied, and I wrote a negative, but factual, review on TripAdvisor,” he says.

But after the post went live, the owner called Fedigan’s brother, who had signed the contract, and demanded that he delete the review immediately.

“Initially, I dismissed it as absurd,” says Fedigan, a legal consultant who lives in London. But then he checked the contract. Sure enough, his brother had agreed that he and his guests would refrain from publishing “any disapproval of the property, disparagement, defamation, libel and/or slander of [property and owner], as well as the property including but not limited to its affiliates and its employees.”

Fedigan’s brother signed away his right to free speech, which appears to be an increasingly common occurrence in the travel industry. Non-disparagement clauses in contracts are multiplying, according to Whitney Gibson, a partner at the Washington law firm Vorys, which specializes in Internet brand and reputation issues. “There have certainly been an increasing number of these clauses in the last couple years, as businesses have grown concerned about their online reviews,” he says.

But a proposed law would tip the scales in the consumer’s favor. The Consumer Review Freedom Act, being considered by Congress, would void any contract that prohibits, restricts or imposes a penalty on customers who write a review. The law has many supporters and a few detractors, but if you’re planning a trip, you can take a few steps to avoid a gag clause, which is most common in vacation-rental contracts.

It’s too late for the Fedigans and many others like them. They reluctantly deleted the review of the substandard vacation rental, which is normally the outcome.

“I consider this an egregious example of free-speech stifling as well as old-school bullying,” Fedigan says. “If you look at public reviews on his property, they are all positive. Clearly, his bullying tactics are effective at dissuading the publishing of negative reviews.”

But companies such as TripAdvisor, which hosted the now-deleted review, are fighting for people like Fedigan.

“We do not believe that unscrupulous business owners seeking to eliminate transparency in the marketplace should be able to muzzle dissatisfied consumers’ opinions and reviews,” Adam Medros, TripAdvisor’s head of global product, said at a congressional hearing last month. “It is completely against the spirit of our site for any business owner to attempt to bully or intimidate reviewers who have had a negative experience.”

There’s another side to this issue, and it also makes a compelling case. “This debate has been cast as being about the freedom of speech,” says James Goodnow, a lawyer with an expertise in technology cases. “It is not — at least not in the constitutional sense. The First Amendment freedom of speech protections only apply to government limitations on speech.”

The issue, he adds, is about the freedom of contract. Specifically, about when and for what reasons the government may limit a contract between two private parties: a reviews site and a user.

Non-disparagement clauses came to my attention in 2012, when readers Tom and Terri Dorow contacted me about their vacation rental in Scottsdale, Ariz. In that case, they had also signed an agreement that forbade them from leaving a review without the owner’s permission. The penalty for an unsanctioned write-up? A $500 fine. After being contacted about their posting, they deleted their review, too.

Supporters of non-disparagement clauses say they need them to protect their business. Rather than denying someone’s right to free speech, rental owners told me, the contracts simply spell out a resolution process for any problems, directing guests to work directly with the owner instead of taking a problem to the court of public opinion.

That court, it seems, is what the travel industry fears the most. Just one negative review could push a vacation-rental owner into foreclosure, owners have told me.

Last year, California Gov. Jerry Brown (D) signed a bill that bans the state’s businesses from forcing consumers into contracts in which they waive their right to comment on the service they receive. There have been no reports of vacation rentals going under because of a review posted since the law went into effect.

The conventional wisdom in the travel industry is that any contract language limiting reviews will hurt businesses and consumers in the long run.

“Any sort of gag clause in a contract is a bad idea,” says Brian Sparker, head of content marketing at ReviewTrackers, a reputation-management company. “Any business that wants to create an environment conducive to growth and brand development should steer away from engaging in this type of behavior.”

Sparker says he believes legislation would encourage travel businesses to do the right thing. Honest online reviews are one of the best ways for businesses to improve the customer experience. “With real customer feedback, businesses can track issues the customer may be having,” he says.

Experts advise reading your contract carefully. Vacation-rental contracts are not standardized, making it easy to slip a gag clause into the fine print. If you see any language that limits your ability to leave a review, ask to have it removed. If the owner won’t, find another rental.

Even without the proposed law, non-disparagement clauses are rarely upheld in court. “In most cases where such anti-free-speech agreements have come to light, the businesses involved have been met with public criticism and a quick backhand from the courts,” says Josh King, general counsel for Avvo, an online legal-service marketplace.

No matter what happens with the Consumer Review Freedom Act, one thing seems clear: The days of silencing customers with a “gotcha” contract are numbered.

Should travel companies be allowed to include nondisparagement clauses in their contracts?

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Posted January 17, 2016
  • mbods2002

    ONE bad review could cause a vacation rental owner into foreclosure? Kind of scary. There’s a right and a wrong way to for businesses to respond to an unhappy customer. I wish they would quit bellyaching and find that way. I 100% agreed that squashing negative reviews will in the long run hurt, rather than help, a business. No way would I ever sign a contract that with a “gag clause”. Thanks for pointing out to look for this nonsense in a contract.

  • Brian_R_Allen

    Surely there aught be Law that makes illegal and/or non-binding any contract that deprives a signatory to it of his rights in Law and/or that permits and/or affords either party other than his reasonable expectations of there being an exchange of monies, goods and/or services of equal value?

  • Molly

    I agree. And I want to note two things:
    I am suspicious of any place that has all glowing reviews. People with complaints are probably more likely to leave a review than someone with no complaint, so how can any place have nothing but glowing reviews?
    To be honest, what really impresses me is a business that responds to the reviews. While a thank you for a good review is nice to see, the business’s response to a negative review is particularly telling. It shows that a business cares and is trying.

  • Always read your contract. If it contains a non-disparagement clause, the property has problems and you should stay away from it.

    Any lawyers here: has one of these clauses ever held up in court? Outside of East Texas?

  • AJPeabody

    A non-disparagement clause is the reddest of red flags. But not everyone reads everything in the boilerplate, so there ought to be a law. Besides the legal proposal (fat chance of it passing in the present climate), Tripadvisor could put in a rule that properties with such a clause cannot have reviews withdrawn.

  • Blamona

    I own, so know both sides. But having said that, as the owner I would have just responded to the review instead of taking it down. We don’t this persons story, so we all know guests can manipulate too (to get freebies, high maintenance, etc)

  • mbods2002

    Yup. A local business with negative reviews had the owner responding all right, with him making all sorts of excuses for shoddy service and in that instance, cakes. Then whined that everyone was being so mean. WHAT? Then another who responded to all reviews and the few negatives with such tact and aplomb, I was sold and wanted to check it out. No business has 100 satisfaction, it’s in the response to the negatives, for us all to see, that, as you say, is so telling.

  • mbods2002

    It might be better if you rephrase this in layperson terms. Personally, I’m not sure what you’re trying to say with all the legalese….

  • KanExplore

    Or better, cannot have reviews, period.

  • Mel LeCompte Jr.

    The businesses are already protected by libel laws. If someone writes FALSELY with intent to harm the business, the business has a recourse, right? So since the businesses already have protection against lies, are these businesses seeking protection against the truth?

  • Carchar

    When a vacation rental comes with a non-disparagement clause in its contract, be highly suspect that there’s a very good reason for it and run the other way.

  • AJPeabody

    Oh, I like that better!

  • CC Gorman

    In the case above, I would publish this-
    “I regret signing an agreement which prevents me from publishing a negative review.”
    It’s a neutral comment, but readers would get your meaning.

  • There was a case in the federal courts, Palmer vs Kleargear (look it up, so I don’t have to regurgitate a complex case) in which the ruling was that a private company has no standing to levy fines on a customer for a non-libelous negative online review. It has, however, never been reviewed by the Supreme Court.

  • Pegtoo

    Or TripAdvisor could crate a flag for businesses that enforce non-deparagement clauses. Then the displayed reviews would be taken in the correct (one-sided) context.

  • RightNow9435

    Only one word to say when you are handed one of those contracts to sign…..Goodbye!

  • DChamp56

    I’m wondering, if in such contracts, there are promises made on the owners as to the exact description/condition of the property, and if not so, if the contract is in violation at that point and negates the review section. (did that come out right?)

  • KarlaKatz

    I’m still fuming about a horrible rental experience in the mountains, just east of Mesa, AZ. The filth, mold, missing light fixtures, and non-usable pool (broken, and filthy), made this property “almost” unlivable… certainly not worth the $$$ we paid. Of course, my review on TripAdvisor was factual, and backed-up with the maximum number of photos allowed per review. I wasn’t hysterical, and pictures said it all: “This is poorly maintained”.

    The owner’s lawyer sent me a copy of my 8-page contract, with the section covering non-publication of bad reviews highlighted. I had no option but to face an expensive lawsuit, or take down the review. I removed the review.

    As of this posting, the property’s TripAdvisor reviews are all glowing. I might add that all but 2 of the 30 reviews are written by first-time reviewers… A red-flag I’d not noticed when booking the property (Thank you Chris Elliott for that quick tip! Nowadays, I always make a point to check out those who are making the reviews.)

  • KarlaKatz

    Oh, yes… I’ve learned my lesson to walk away.

  • KarlaKatz

    Great idea!

  • AJPeabody

    I am wondering if saying nothing but publishing the pictures would constitute a review.

  • LonnieC

    Two thoughts: First, it’s hard to believe that one negative review will cause a business to go under. Few, if any, would rely on a single review. If it’s one of many, and the others are generally positive, the negative review would likely be ignored. And if it’s the only review on a particular site, it’s likely that the same venue will be reviewed at another site, to see if there are more than that one. A single review simply doesn’t hold much weight.

    Second. As for the “non-criticize” clauses, if you find one in a contract you’re asked to sign, cross it out and initial it. Let the other party say he can’t accept it. In many cases that party will not even read what you’ve done. It may be a way to limit the effectiveness of such provisions. Can’t hurt to try. Of course, this doesn’t work if you’re presented with a small electronic device and told to sign in the little window. That’s when you get very unpopular and ask to have a printout of the Ts & Cs to read….

  • You may be onto something here. If I were in Karla’s situation I would post pictures of the filth, mold, broken pool, etc. with a made-up glowing review that goes comically over the top. I would welcome this as an irresistible challenge.

  • KarlaKatz

    Great minds….. I think I’ll take you up on the challenge :-) Rather than a glowing review, I may just come up with some creative cutlines for the pics: “Stunning view from bedroom #2” … the view was a side yard, filled with every imaginable car part, broken camper pieces, shards of pottery, etc. It was, to say the least, “stunning”. I’ll have fun. The worst that can happen? I’ll be coerced into removing the review… again.