You’re a small business owner who provides a service; maybe you’re a contractor, landscaper or own a bakery. You have built a strong reputation in your community by word of mouth and quality work. It doesn’t matter what type of small business you own, you can still become a victim of a scathing negative review from a customer. Bad reviews, whether true or not, can hurt your reputation and damage your bottom line. If they are false, and damage your business, you can sue them for libel, among other things. But the decision to sue even a former customer should not be made lightly.
Websites such as the Better Business Bureau, Home Adviser and Angie’s List, help businesses build a reputation through customer comments and reviews; they can also be costly to a business’s reputation if a customer posts a negative, false, or defamatory review.
A negative, false, or defamatory review about your company is infuriating. Fortunately, hidden within the user terms of websites such as Better Business Bureau and Home Adviser, is language that prohibits the posting of false reviews. You can find both the Better Business Bureau’s and Home Adviser’s user agreements here and here. You can use those terms to ask those site owners to remove the review or force the consumer to modify it.
However, consumers and customers have a right under federal law to post comments and reviews. Small businesses cannot use form contracts or adhesion contracts to prevent such reviews. The Federal Trade Commission passed the Consumer Review Fairness Act (CRFA) which became effective on March 14, 2017. You can check the law out here. This law prevents companies from putting gag orders in form contracts, which are terms that are intended to prevent customers from making written, oral, or pictorial performance reviews about the goods and or services provided by that company. Do not include language like this in your boilerplate terms and conditions! Doing so not only will violate the federal law, it probably will also violate Connecticut's Unfair Trade Practices Act, which we've written about before here.
The Consumer Review Fairness Act, however, only protects a consumer’s right to make honest reviews of goods and services. The law provides that a business, like a builder or home improvement contractor, can pursue the removal of a review that is clearly false or misleading, and may sue the customer for slander, libel, or defamation.
Like most laws, this law is not black or white, and has not been tested too much by the courts. What makes something “clearly” false or misleading? What if the customer was difficult from the time you entered into a contract and made it impossible for you to fulfill it? There are dozens of scenarios that could lead to a bad review that shouldn’t reflect on your business.
Problems with customer reviews highlight why it is so important for contractors, for example, to document the work they do, using timesheets, project calendars, and photographs of the work. This information may help prove that a customer’s review is clearly false and misleading. If it is, you may have a case for libel, which is a written form of defamation, and can recover compensation for the damage to your business reputation. These cases, however, are difficult and expensive to bring. Also, the last thing your business wants to do is get a reputation that it sues its customers. So, the best advice is to do good work, be on time, and communicate well and often with your customers.