The vast majority of customers read reviews to determine the quality of a business.
While a good review can help boost your brand reputation, a negative review can also cause significant harm to your business. If you or your business has sustained reputational damage due to a bad review, you may be eligible to take legal action against the reviewer and pursue compensation for your losses.
Depending on the quality of products or services received from a business, customers are permitted to leave online reviews. Typically, the review will describe the customer's experience, thereby helping potential customers make informed buying decisions. However, if the statement is false or defamatory, a business can pursue legal action against the reviewer for posting intentionally misleading or negative reviews.
Example:
In 2015, Footprints Floors, a flooring company in Colorado, sued a couple for a negative review posted on Yelp. The company claimed that the review was false, and it cost them 167 projects and $625,000 in revenue. The couple eventually racked up $65,000 in legal fees, including a settlement payment of $15,000 to the company. This and many more examples have set legal precedents across the country for businesses to sue their customers for bad reviews.
Consumer Review Fairness Act (CRFA)
The Consumer Review Fairness Act of 2016 was enacted to protect customers from unjustified punishment and intimidation by businesses for posting honest reviews. According to the Act, it is illegal for a company to use a contract provision which:
Restricts a customer's ability to review a company's products, services, or conduct.
Imposes a penalty, fine, or fee against a customer that gives a review.
Requires customers to relinquish their intellectual property rights in the review.
This Act not only safeguards the fundamental right to free speech but also ensures transparency in consumer-business interactions. By protecting the authenticity of online reviews, the CRFA encourages honest dialogue about products and services, thereby enabling consumers to make more informed decisions.
Moreover, this balance of power encourages businesses to maintain high standards as they can no longer silence or penalize customers for unflattering, yet truthful reviews, which in turn contributes to a healthier, more competitive market.
California's Anti-SLAPP Statute
California's anti-SLAPP (Strategic Lawsuit Against Public Participation) laws are designed to provide relief to SLAPP lawsuits.
The statute helps prevent people or businesses from using unfounded lawsuits, courts, or potential threats of a lawsuit, to intimidate and silence customers or other people from exercising their right of petition or free speech under the First Amendment. Hence, if a reviewer is being sued for posting a bad review, they can file a petition requesting that the court dismiss the lawsuit on the basis that it lacks merit.
The Difference: Defamation vs. Bad Review
Defamation can be described as a false statement presented as a fact that ends up causing injury or damage to the reputation of a person, business, or entity. For instance, if a statement is false, and a business loses customers due to the false statement, it may be considered defamation. Defamation can be in the form of libel or slander, and it can be bad for any business.
Conversely, a bad review is a negative review that reflects the poor first-hand experience of a customer with a company's product or services. Negative reviews may either be a good negative review or a bad negative review. For instance, an honest and unbiased review of a product explains the problem with the product upon using it.
Types of Defamation
Defamation can take two forms: libel and slander.
Libel refers to false or defamatory statements expressed through various mediums such as writing, pictures, signs, print, or any other physical form of communication.
Slander, on the other hand, involves false or defamatory statements conveyed orally, typically through speech.
Both libel and slander can harm a person's reputation and are considered legal offenses. It is important to be aware of the potential consequences of making false statements that can damage someone's character or standing in the community.
How to Prove Defamation
In order to prove defamation, the plaintiff must show the following key elements:
The defendant made a false statement claiming to be factual.
The defendant communicated or published the false statement to a third party.
The statement was unprivileged or non-confidential.
The defamatory statement resulted in harm, injury, or other losses to the defamed party (plaintiff).
Considering Suing for a Bad Review?
In California, reviews are protected under the First Amendment Act or Anti-SLAPP statute. Therefore, before you can sue for a bad review, you should determine if the review would qualify as defamation or whether it would be protected by free speech under the First Amendment Act.
What Will You Need to Prove?
To sue for a negative review, you will prove that the statement qualifies as defamation. This requires that the statement satisfies the following elements:
It was a false statement.
It was published to a third party (someone other than the person who brought the case).
It was made as a statement of fact, rather than opinion.
It injured the reputation of the defamed party.
It was not a privileged or confidential review.
For instance, consider a scenario where a disgruntled customer posts a review claiming that a restaurant has violated health codes by having pests in their kitchen. If this claim is entirely fabricated and the restaurant subsequently undergoes an inspection that finds the premises in exemplary condition, the restaurant owner may have grounds to claim the review is defamatory.
They would need to demonstrate that the false statement of fact—that the restaurant violated health codes—was published to third parties (potential customers reading the review) and caused the restaurant reputational damage and potential loss of business.
The review, being a false claim of fact rather than an opinion, is not protected under the First Amendment or Anti-SLAPP legislation. This would satisfy the criteria for defamation and allow the restaurant to consider legal recourse to protect its business interests.
Possible Damages
The following damages may be recovered in a defamation lawsuit:
Actual or compensatory damages for the actual lost earnings caused by the false statement or defamation.
Non-economic damages to serve as compensation for the company's damaged reputation.
Mitigating damages to reduce the loss suffered by the company.
Punitive damages to further punish the reviewer.
Enlist an Experienced Lawyer You Can Trust
At the end of the day, your brand reputation is crucial to the success of your business. A negative review can affect your business' growth and revenue. Therefore, if you believe that a reviewer has made a defamatory statement against your business, hiring an experienced commercial litigation attorney immediately is important to protect your legal rights and help you seek justice.
Attorney William B. Hanley has the necessary experience and resources to assist and represent individuals and businesses considering a defamation lawsuit.
Using his hands-on approach and comprehensive legal understanding, attorney William B. Hanley will review the defamatory statement, work to prove its inaccuracy and gather substantial evidence to support your case. As your legal counsel, he will fight vigorously to protect your rights and pursue fair financial compensation for any harm done to the reputation and success of your business.
If you believe you have a case, call William B. Hanley, Attorney at Law today to schedule a one-on-one case evaluation. He can offer you the detailed legal counsel, reliable advocacy, and strong representation you need in your case.
Bill is proud to serve clients across Irvine, Los Angeles, Orange County, and San Diego, California — so call or reach out today to learn more about how he can help with your case.
