The Legal Side of Online Reviews

Online reviews can build or break a business’s reputation—and they also carry significant legal implications. Whether you’re a business owner managing customer feedback or a consumer posting reviews, understanding the laws surrounding online reviews helps you stay protected.

Why Online Reviews Matter

Online reviews are influential, shaping purchasing decisions and contributing to a brand's credibility. They can either attract new customers or scare them away. But false, defamatory, or deceptive reviews can lead to lawsuits. Businesses must ensure that reviews they promote are honest endorsements and not misleading. According to the Federal Trade Commission (FTC), businesses are required to disclose any material connections between them and reviewers, ensuring that reviews are not fake or biased.

Legal Issues for Consumers

Consumers must be mindful of what they post, as there are potential legal risks when writing online reviews.

1. Defamation Risk

• Writing a review that contains false statements about a business or individual can lead to a defamation lawsuit. Defamation involves making false statements that damage someone’s reputation. While opinions are generally protected under the First Amendment, presenting false information as fact is not.
• For example, calling a restaurant "the worst food I’ve ever eaten" is an opinion, but claiming "the restaurant served food that was undercooked and caused food poisoning" could be considered defamatory if untrue.
• To learn more about the legal intricacies of defamation, check out our guide on What Is Defamation of Character?.

2. Truth as a Defense

• If your review is truthful, you generally have a strong defense against defamation claims. In the legal world, truth is an absolute defense to defamation. If you can support your statements with evidence (such as receipts, photographs, or emails), your review is likely protected, even if it’s critical or negative.

3. Non-Disparagement Clauses

• Some businesses try to limit negative reviews by including non-disparagement clauses in their contracts. These clauses may attempt to penalize or take legal action against consumers who post unfavorable feedback. However, the Consumer Review Fairness Act (CRFA) prohibits businesses from using such clauses. It ensures that consumers can leave honest reviews without fear of retaliation.
• For more details on the CRFA and what it protects, visit the FTC’s Guide on the Consumer Review Fairness Act.

Legal Concerns for Businesses

Businesses, while trying to manage their online reputation, should also be cautious about the legal risks tied to online reviews.

1. Posting Fake Reviews

• Creating or paying for fake reviews is a serious violation of FTC rules. It’s considered deceptive advertising and can result in significant penalties. The FTC has fined companies for paying for fake positive reviews or posting deceptive testimonials.
• In one high-profile case, a well-known company was fined for paying people to write fake positive reviews and for encouraging their employees to write glowing reviews under fake names.
• Businesses should ensure that all reviews they solicit from customers are genuine and unbiased.

2. Responding to Negative Reviews

• While businesses can and should respond to negative reviews, they must be careful not to violate privacy laws. For example, businesses should avoid revealing private information such as:
• Medical details (protected by HIPAA in healthcare settings).
• Financial information (which is also protected by various laws).
• Revealing private customer details in public responses, even in an attempt to resolve an issue, could expose the business to lawsuits or legal actions for violating privacy rights.

3. Removing False Reviews

• If you encounter false or defamatory reviews, you might consider reporting them to platforms like Google or Yelp, which allow businesses to flag content that violates their policies. However, removal isn’t guaranteed, and legal action might be necessary if a review contains false information that could severely damage the company’s reputation.
• In cases of egregious falsehoods, businesses can pursue legal remedies, such as sending a cease-and-desist letter or filing a lawsuit for defamation.
• For practical tips on handling escalating disputes, visit How to Resolve a Business Dispute.

Best Practices to Stay Protected

Both consumers and businesses can take steps to protect themselves from legal issues related to online reviews.

For Consumers:

• Stick to the facts: Base your reviews on your personal experience and avoid exaggeration.
• Avoid making false statements: Be careful when making statements that could be seen as factual claims, such as "the food made me sick," unless you can back it up.
• Keep records: Save receipts, emails, and other documentation that can support your claims.

For Businesses:

• Encourage genuine reviews: Ask customers to leave honest feedback without offering incentives or rewards in exchange for positive reviews.
• Respond professionally: Address negative feedback with respect, aiming to resolve the issue without disclosing any private customer information.
• Have a process for complaints: Develop an internal system for handling customer complaints, ensuring any concerns are addressed in a timely and legal manner.

Businesses should also consult a lawyer with experience in reputation management and business disputes, especially when dealing with defamation claims or online review disputes. For more advice on finding the right legal help, check out How to Choose the Right Business Lawyer.

Final Thoughts

Online reviews hold significant power but also come with legal responsibilities. Whether you’re writing a review or managing one, it’s crucial to be aware of the defamation laws, privacy regulations, and consumer protection laws that govern online feedback. By staying informed and following best practices, both businesses and consumers can protect themselves and foster an environment of honesty and trust in the digital space.