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New law cracks down on businesses that ban bad reviews

Stan Alcorn Sep 17, 2014
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New law cracks down on businesses that ban bad reviews

Stan Alcorn Sep 17, 2014
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California Governor Jerry Brown has signed what some have dubbed the “Yelp Law.” It bars the business practice of “non-disparagement clauses”: fine print that prohibits customers from writing bad reviews. 

The law was inspired by a case in Utah, in which online retailer KlearGear went after a couple who aired their grievances on the website Ripoff Report. KlearGear responded by calling the husband, John Palmer. His attorney, Scott Michelman characterizes that call: “‘Your wife criticized us on Ripoff Report. You now [owe] us a penalty of $3,500.”

Michelman and the Palmers ultimately won the case, though it took a lengthy legal battle. Their story inspired the California law, which bans such policies outright and imposes escalating financial penalties if businesses seek to enforce them.

Michelmann added that the law does nothing to restrict the traditional way of dealing with malicious and untrue statements: a defamation lawsuit.

“As opposed to an effort to harass, intimidate and silence its critics,” Michelson says. 

Either way, though, the business has to find those critics. Sparks Steakhouse is suing Yelp to find the identity of a reviewer who claims to be a former employee. “I have personally spit my own sal[i]via [sic] into dishes for the passed [sic] 3 weeks now,” the review says. 

Across the street from the restaurant, Victoria Miller says that one review would keep her away. “I would definitely avoid that place at all costs,” she says. 

True or false, that online critic’s best defense is anonymity. 

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