By Hannah Lepow
Maryland is poised to become the second state in the country to ban businesses from contractually prohibiting customers from posting bad reviews online. The Nondisparagement Clauses in Consumer Contracts bill passed the state House on February 19 by an overwhelming majority and now goes on to the state Senate.
Maryland’s law substantially mirrors the legislation passed in 2014 in California that has become known as the “Right to Yelp” law. Both seek to prohibit companies from using non-disparagement clauses — contract clauses that prohibit customers from speaking their minds online — by fining business that seek to enforce them.
As online review sites like Yelp have grown more and more popular, a variety of companies have tried to limit their customers from posting negative reviews online by threatening hefty fines for such speech. A New York hotel reportedly charged couples who booked the venue for a wedding $500 for each guest that left a negative review. Dozens of people took to Yelp to post extremely negative (and presumably fake) reviews in response. In a more creative twist, a New York dentist not only prohibited her patients by contract from negatively reviewing her, but the contract also assigned the copyright of any negative review to the dentist, giving her a copyright claim against Yelp in the event that a review was published (sites like Yelp are generally immunized from hosting user-generated content, and therefore typically do not have to remove posts when a business makes a defamation claim). The California Right to Yelp law was crafted in response to a Utah couple who sued an online retailer after the retailer demanded a $3,500 payment for a negative review the couple left regarding a $20 purchase.
A federal equivalent to the California and Maryland laws, the Consumer Review Freedom Act (introduced by Sen. John Thune (R-SD)) unanimously passed the Senate in December 2015. The Senate bill makes any form contract provision void if it restricts a party to the contract from reviewing the goods or services contracted for, or imposes a penalty or fee for such reviews, or transfers the intellectual property rights in the review. A parallel bill was introduced in the House last year by Rep. Darrell Issa (R-CA-49) and is currently in committee.