To prevent negative reviews on social media sites, some businesses, retailers, and healthcare practitioners have taken to inserting a "nondisparagement" clause in customer contracts, patient agreements, and purchase agreements. Beginning next year, that kind of clause will be illegal in California.
On Tuesday, Gov. Edmund (Jerry) Brown Jr. signed AB 2365, which states the following: "A contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer's right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services."
Former Assembly Speaker John Pérez (D-Los Angeles) introduced the bill earlier this year after he learned about a Utah couple who were left with a damaged credit rating after an online retailer demanded a $3,500 penalty from them. The couple had posted a negative review about their purchase, violating a nondisparagement clause in the terms-of-sale contract they accepted when they completed their online order. Pérez said the purpose of the law is to make sure consumers are aware of these clauses upfront.
"Most of us assume we have just as many rights after making a purchase as we did before," Pérez said in a statement on his website. "If a merchant thinks our First Amendment free speech rights need to be curtailed, they should say so, upfront, and in plain language."
The new law establishes a civil penalty of $2,500 for the first violation and $5,000 for each subsequent violation. The civil penalty shall be payable, as appropriate, to the consumer or to the general fund of whichever government entity brought the action to assess the civil penalty.
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