California Governor Jerry Brown signed into law a bill that prevents consumers from facing legal action from businesses over negative reviews. The law keeps businesses from being able to prevent customers from writing negative reviews or penalize them for doing so.
As a Washington Post article that Yelp points to explains, "The bill bans businesses from forcing consumers into contracts in which they waive their right to comment on the service they receive, and it also bars businesses from otherwise penalizing customers for such statements. It imposes fines of $2,500 for the first violation and $5,000 for each thereafter. If a violation was willful, intentional or reckless, an additional fine of $10,000 could be levied."
The bill is being referred to by some (including Yelp) as the "Yelp Bill". The company says on its blog:
From time to time we hear about businesses that are so afraid of what their customers might say about them that they sneak clauses into consumer contracts designed to forbid their customers from saying anything bad about them on sites like Yelp. Some of these contracts even threaten fines or legal action. These types of non-disparagement contracts not only seek to intimidate potential reviewers away from sharing their honest experiences online, but also threaten to deprive the public of useful consumer information.
A five-star rating for a business who had used one of these clauses to simply scare all negative reviewers into removing their comments wouldn’t really represent the experience a consumer could expect to have at that business in our opinion.
AB 2365 makes it explicitly clear that non-disparagement clauses in consumer contracts for goods or services in the state of California are void and unenforceable. What this means is that individuals writing online reviews in California are now further protected from those bad actors who hide jargon in consumer contracts in attempts to prohibit you from posting reviews -- positive or negative -- online.
The passage of the Yelp Bill is the second favorable piece of legal news for the company in as many weeks. Last week, an extortion suit was dismissed.
Yelp still faces a class action suit from shareholders who claim the company mislead them about the legitimacy of reviews.
You can look at the bill here.
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