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How Far Can a Company Go to Protect Its Online Reputation?

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Updated 9/15/14: Governor Brown signed AB 2365, put forward by Assemblyman John A. Perez (D-Los Angeles), which makes non-disparagement clauses in contracts for sale or lease of consumer goods or services unlawful unless the clause is knowingly, voluntarily, and intelligently waived by the consumer. Perez authored the bill after learning about the KlearGear case.

The following is a guest blog post by Harmony Groves Kessler, a solo practitioner assisting individuals, small businesses, and attorneys with legal issues in business contracts/transactions public agency law and family law in northern California. She is the former Mayor of Arcata, California, where she served a four-year term on the City Council.

In today’s world, especially with sources like Yelp, it’s simple to find online reviews of most any company. We often rely on posted comments to get a sense of a business and feel justified to warn other customers when we’ve had a bad experience. Companies are increasing their efforts to monitor their online reputation and keep critical reviews from driving business away. But is punishing a customer for a bad review with a large fine going too far?