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4 Reasons Why Non-Disparagement Clauses are a Bad Idea

Every time a customer engages in business with you, they are entering into a contract.

Some contracts are very simple. For example, when you purchase a meal, the restaurant implicitly agrees to serve you the food items as described on the menu, within reasonable time, in exchange for the posted price.

For most transactions in B2C and B2B relationships, the conditions associated with a contract are very basic. There may be some guarantees for the customer and some protections to the seller, mainly associated with their ability to secure payment, but nothing beyond that.

In light of a marketing landscape that’s quickly evolving and becoming more dependent on peer-to-peer recommendations and online reviews, many businesses have taken extreme and often unnecessary steps to protect their brand from negative actions on the part of customers that will directly impact the image or profitability of the business organization.

In short, in a misguided effort to protect their brand reputation, many businesses are telling customers that they will impose penalties if they voiced their honest negative opinion in public forums. They tell customers they can’t write bad reviews.

Including a non-disparagement clause on a contract is a bad idea, and any business organization that wants to create a business environment conducive to growth and superior brand development should steer away from engaging in this type of behavior.

What is a review-specific non-disparagement clause?

Imagine a service provider such as a hotel or plumber. Along with your quote or reservation, there is a good chance you will have small print, with the terms and conditions outlining your business relationship with the provider.

So far, so good, but what if the provider includes a conditional clause that hinders you from writing a negative review regardless of the specific details of your experience? Believe it or not, many consumers are finding out that they have entered into contracts where speaking their minds is subject to a punitive fee.

Last year, a couple from Cumbria was fined one hundred British pounds for writing a negative review on TripAdvisor after their one-night stay at the Broadway Hotel in Blackpool, England. Verbatim, the terms and conditions of their booking contained the following non-disparagement clause (head here to read the full story):

Despite the fact that repeat customers and couples love our hotel, your friends and family may not. For every bad review left on any website, the group organiser will be charged a maximum £100 per review.

To their surprise, after leaving their negative review, this couple received the credit card charges associated with this clause. While this may seem unfair, the practice is not necessarily illegal. But it does create many barriers that will hinder the ability of a business to effectively connect with its customers and create experiences conducive to loyalty and increased conversion.

Who’s adding non-disparagement clauses?

Adding a non-disparagement clause to the small print of a contract is a symptom of pervasive operational issues and poor management.

Businesses whose focus is on creating a superior customer experience at all stages of the transactional cycle have no need for this type of measure. A non-disparagement clause is a knee-jerk reaction to a slew of negative reviews affecting the brand reputation of a business, paired with the unwillingness to tackle the problem at its root.

Most commonly, this type of clause is found in small, privately owned businesses that have been ill advised by less-than-scrupulous peers or marketing agencies. This scenario happens most often when the transactional experience allows for terms and conditions to be included, and the customer signs the contract, booking, or order, either in person or digitally.

(Check out: Florida Apartment Complex: Write a Bad Review, We Fine You $10,000)

We can’t think of a single scenario where having this type of clause makes sense in a business setting. Presently, there are efforts underway to create legislation that would protect the voice of the customer and the right to post online reviews. Preemptively muzzling customers from voicing their honest opinion if it will have a negative impact is a First Amendment issue. Threatening to come after customers via a lawsuit is not the type of environment that fosters free commerce.

Let’s look at some of the reasons why you should refrain from engaging in censoring your customers:

  • A non-disparagement clause does not fix organizational problems

As a business, there is nothing worse than wanting to wear blinders. Threatening your customers with penalties for voicing their opinion in light of negative experiences puts you at a disadvantage when it comes to securing usable data that can be leveraged to refine and improve your business strategy.

Without the voice of your customers, pleased and displeased alike, you can’t draw a full picture of how others perceive your business. Thus, you walk aimlessly on a business path that leads to nowhere. Negative feedback is priceless when it comes to process and product improvement that is aligned with the wants and needs of your customers.

  • A non-disparagement clause is a poor customer service strategy

Putting a non-disparagement clause in place tells your customers that you don’t care. For many, an online review is the means to escalate a concern that went unattended on location, with the least amount of effort.

Removing the option to have an easy path to connect with you sets the stage for high customer churn, and erodes any hope for repeat business or inclination to recommend your venue to others.  

  • A non-disparagement clause can result in viral embarrassment

In almost every instance where a business has moved forward and acted upon its non-disparagement clause, the tables have been turned, resulting in deeply embarrassing press coverage that always takes the side of the consumer, and often acts as the ombudsman as consumers attempt to recover the penalties imposed by the business.

  • A non-disparagement clause doesn’t help build your brand reputation 

As much as you may want to have perfect 5-star review profiles on every possible online review site, this may not be the best and smartest move.

Having negative reviews interspersed among your positive reviews adds trustworthiness to your profile, and provides you with an opportunity to show future customers the way less-than-perfect situations are resolved.

A potential customer is far more likely to want to engage with a business that is committed to going the extra mile when things do go wrong than with one that has a flawless profile.

Finally, and most importantly, your business can only build a strong brand reputation by changing behaviors, processes, and products based on customer feedback. Without feedback, the chance of ever developing a strong online and offline reputation is almost none.

Read On: Look on the Bright Side: 4 Ways Bad Online Reviews Can Be Good For Your Business

Kevin Kent

Kevin is the Director of Finance and Operations at ReviewTrackers. Every day he finds creative ways to solve business owners' problems and identifies key issues to help them achieve top results.

Discussion

  1. Vince

    Obviously someone who place a non-disparagement clause, is someone who deserve a lot of bad reviews. I mean, if you know that you are running a business that will make users feel comfortable using your service and you keep up with good work, you don’t need to write a non-disparagement clause, as you will not get any bad reviews. Whoever write such thing does not deserve a chance to host any guests. I would definitely avoid such place.

    Reply
    • Bowie

      I agree, I was not even aware that this practice existed and I am disgusted to say the least that somebody would do this. I am going to carefully look out for this when I decide to go on a vacation next time and straight up avoid such places.

      Reply
  2. Mark Dee

    When you ask your customers to sign this non-disparagement clause it’s like you promise them a bad service.

    Reply
  3. Arnoldi

    You can pass them another contract demanding that they are obligated to fulfill all your wishes, otherwise you can sue them. I doubt that they will try this again 🙂

    Reply
  4. spameater

    Hahaha, I never thought that restaurant’s bill is some kind of contract.

    Reply
  5. Feeding Frenzy

    So, it’s clear, if you want to keep selling [email protected], you make some sort of agreement with your customers, and it’s fine. Personally, I wouldn’t eat in that kind of a restaurant, for sure.

    Reply
  6. big Al

    Anyone signed such an agreement and had a decent meal after that? I don’t think so. If I will ever be asked to sign such an agreement I will immediately leave that place and find another dining place even if they have only 3 stars. Their 3 star rating is probably more valuable then the forced with agreement 5 star.

    Reply
  7. t d barnes

    There are people who write bad reviews as a tool to get room rent refunded. There needs to be a place to publicly report these people as they hold businesses up for ransoms – this would eliminate them if you could sue or charge them

    Reply
  8. CM Alvison

    It’s called negative review blackmail. And in nearly all cases we pay up and customers are aware of the damage that negative reviews that can cause. We have exceptional service, but sometimes it doesn’t meet the expectations of the customer, so they are inclined to use this tactic to gain leverage. And they are finding that it works very well.

    Reply
  9. Matthew Thompson

    4 reasons why non-disparagement clauses are a GOOD idea:

    1.) With regard to negative reviews, the crime does not fit the punishment. A customer may have had a negative experience for 2 hours, or 2 days, or whatever. However, when a negative review is posted it stays there forever. Even if the review is credible it’s not fair for the recipient sentenced for a lifetime.

    2.) Most non-disparagement clauses provide a clearly defined resolution path that is agreed on by all parties before services are rendered. This gives the customer a chance to decide whether he would like to move forward with the service, and it gives the merchant the freedom to do business with people who aren’t into taking to the internet to express their public disapproval of everybody.

    3.) Most people are idiots (let’s face it, they are), and they don’t know how to write a fair negative review. Well over half the negative reviews I read are libelous and defamatory. Take for example this quote from a review I found on vrbo: “One side of the electric toaster was defective and almost caught fire when we tried to use it. ” Either the toaster catches fire or it doesn’t. This reviewer is setting himself up to get sued by using such a defamatory tone in his tact. There’s a way to say you had trouble with the toaster without trying to lead on that the place nearly burned to the ground. Most people can’t write reviews fairly and instead resort to extreme exaggeration. This causes undo harm to the merchant. I applaud any merchant who sues people who leave untruthful reviews.

    4.) Non-disparagement clauses help limit the proliferation of extortion sites like yelp. Yelp, and sites like them, give people a place to leave negative reviews. Yelp then calls the merchant asking them for money before the merchant an participate in any responses or conflict resolution. This is extortion in it’s purest form, and merchants should not have to endure this. Since non-disparagement clauses stop the negative reviews before they even happen, it also stops the proliferation of unscrupulous websites like Yelp.

    Reply

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