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Can A Non-Disparagement Clause Prevent A Bad Review?
A photographer came to us recently that had a situation with a client who wanted to cancel services.
The photographer wanted to know whether there was a way to prevent a bad review if the client signed a cancellation contract with a non-disparagement clause in it. While cancellation contracts are ESSENTIAL to protect businesses when a client cancels, it's important to recognize their limitations when it comes to preventing customers from sharing their honest opinions, even if they are not entirely positive.
The Purpose of Non-Disparagement Clauses:
Non-disparagement clauses are typically seen in an employee or contractual relationship between businesses. Essentially a non-disparagement clause protects a business from employees or partners or joint ventures from talking bad about them during or after the relationship ends. This avoids the awkwardness of a disgruntled employee or partner writing bad reviews about your business or talking to third parties about their time with you. It is a great clause that you SHOULD have in your employment contracts and B2B (business-to-business) contracts, but it does NOT belong in your client cancellation contract.
The Consumer Review Fairness Act (CRFA):
Customers enjoy certain protections under federal law when it comes to sharing their reviews and opinions. The Consumer Review Fairness Act (CRFA), enacted in 2016, safeguards the rights of consumers to freely express their honest experiences and opinions about products and services. The CRFA prohibits businesses from including provisions in their contracts that restrict customers' abilities to provide reviews or penalize them for doing so. This federal law empowers customers to share their feedback openly without fear of retaliation, ensuring that their voices are heard and their opinions contribute to informed decision-making for other consumers.
While non-disparagement clauses seem like a good idea for a cancellation contract it is actually illegal under this Act to have a client sign one for the purpose to prevent a review. Authenticity and transparency are crucial in building trust between businesses and customers. Customers have come to rely on the opinions of others to make informed decisions about products and services. Restricting customers from sharing their genuine experiences, even if they are less than favorable, may ultimately hinder a business's ability to improve and grow.
Rather than focusing solely on preventing negative feedback, businesses can benefit from embracing customer reviews as an opportunity for growth and improvement. By actively seeking and addressing customer concerns, companies can foster a culture of transparency, trust, and continuous improvement.
Confidentiality Clause in Cancellation Contracts:
Although you can't have a non-disparagement clause in your cancellation contract you should have a confidentiality clause. No, this confidentiality clause does not prevent your clients from writing reviews about their experience with you, but it DOES require that the client keep the terms and conditions of the cancellation contract confidential. This means that the client cannot publicly share how much you are crediting or refunding, how much of the fees you are keeping, or the terms of the cancellation. This clause will give you the freedom to enforce your business practices when it comes to refunds and fees without the fear of other businesses or potential clients knowing the ins and outs of your business.
Now that you know exactly what you can and cannot enforce in a cancellation contract the next thing you need to do is get that cancellation contract in your business toolbox so that you can protect yourself and your business in the event a client has to cancel on you. Click on the “Clauses Included” tab to see all the clauses we do recommend you have in your cancellation contract!
THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.
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