A Blackpool hotel hit the headlines this week for 'fining' a couple £100 for posting a scathing review on TripAdvisor, in breach a 'no bad review' clause in its terms and conditions.
The hotel is reported to have relied on a provision of its hotel policy, purportedly entitling it to charge a 'maximum £100 per review' for every bad review left on a website. The sum was charged directly to the couple's credit card following their post.
In a move which Trading Standards are reported as saying they have never seen anything like before, it seems this particular hotel was intent on tackling head on the growing issue for businesses of the ever increasing popularity of sites such as TripAdvisor and the modern day phenomena of consumers having easy access to social media platforms on which to post damning comments.
Novel or damaging approach?
In this particular case, the strategy appears to have backfired, since television and newspaper commentary has highlighted a string of other scathing reviews of the hotel in question, thus drawing attention to the very criticisms against which the policy was no doubt designed to mitigate. The hotel has since reportedly backed down and reversed the fine and the policy.
Technology vs the Law
The case begs a question as the law fights to keep apace of technological advances and a changing world - can businesses include in their terms and conditions a 'gagging' clause, prohibiting defamatory review or comment, and also provision for liquidated damages, as in this case?
Non-disparage clauses are a recognised feature of some types of agreements, such as bespoke employment severance agreements; but not with liquidated damages attaching. And they are equally recognised as being potentially difficult to enforce.
In mainstream consumer facing contracts like this one, involving contractual 'small print', there will be the usual questions as to incorporation, interpretation and whether a liquidated damages clause is unenforceable as a penalty clause (not a genuine pre-estimate of loss). In addition, however, the clause is likely to fall foul of the Unfair Terms in Consumer Contracts Regulations, and Trading Standards were said to be looking at this very issue.
Under the Regulations, terms that cause 'a significant imbalance in the parties' rights and obligations, to the detriment of the consumer' are void, and one of the relevant factors is whether a term is in line with 'good standards of commercial morality and practice'. 'Gagging' clauses like this may very well not be.
So both from a PR perspective (where a clause like this can sensationally backfire, as in this case) but also a legal perspective, such clauses are unlikely to work. English defamation law recognises the convention right to freedom of speech. It provides a defence where comments amount to 'honest opinion'. And it requires businesses to overcome a threshold test of 'serious harm to reputation', i.e. actual or likelihood of serious financial loss, before a statement is deemed defamatory. Unfair contract terms legislation will no doubt be applied consistently with these principles.
Where comment has all the elements of genuine honest opinion, a broad shouldered approach combined with focus on improving the consumer experience may well be the advisable option so as to avoid further adverse PR.
If you are a business experiencing difficulties with defamatory reviews or campaigns whether from customers, competitors or third parties, please get in touch and we would be happy to advise you on your options.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.