A consumer’s right to speak should prevail unless a merchant is able to prove actual damages, says a new Canadian research report that looked at the consequences of online reviews.
The paper from Quebec-based Options consommateurs (OC) evaluated the legislative balance between a consumer’s right to publicly share unpleasant experiences through online reviews and a merchant’s right to protect reputations from unfair criticism.
The Criticism of Companies via Social Media and Digital Platforms: An Alternative Route to Justice for Consumers? reviewed Canadian case history, legislation and sampled consumers’ perspectives through focus groups.
To protect their reputations, many companies have chosen to either include contract clauses that prevent consumers from expressing dissatisfaction with the seller (known as anti-disparagement clauses) or to file defamation suits when online comments criticize products or services.
Proposed revisions to Ontario’s Consumer Protection Act would ban businesses from including terms in a contract that try to deter consumers from publishing negative reviews. The Consumer Review Fairness Act in the United States was passed in 2016 to prevent businesses from suing or penalizing consumers for posting negative reviews.
The OC study concludes that “the consumer’s right to speak should prevail in situations when the company is unable to prove actual damages such as a reduction in its profits or lost clientele” and noted that the United Kingdom and Australia have added requirements to demonstrate meaningful harm.
The OC study reviewed 43 defamation decisions from various provincial courts since 2018. It found that many of the suits brought by companies “seem ill-adapted to the current widespread use of social media and digital platforms as a form of expression.”
It found that the responsibility of the company for the deterioration of its reputation is “conspicuously absent from the debate” and that “courts are reluctant to consider online reviews as serving the public interest.” In addition, companies are awarded unproven damages.
In six consumer focus group sessions, however, researchers found that the main motivation for posting online reviews is to warn other consumers, and encourage companies to abandon bad practices.
The report make numerous recommendations for merchants, policymakers, consumers and digital platforms, including amending laws to prohibit businesses from using anti-defamation clauses in contracts and from pursuing actions for damages from negative reviews unless the comments are malicious, made in bad faith and cause serious financial loss to the business.