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April 1, 2024 | BusinessEntertainmentGeneralLitigation

What Should Businesses Do When They Receive Bad Online Reviews?

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Robert Kleinfeldt

Senior Counsel

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Ali Rawaf

Law Clerk

A business’s online reputation matters. Consumers are increasingly relying on online reviews to purchase products or hire professional services. Online reviews often play an important role in building a company’s reputation.  Businesses with negative online reviews generally take them quite seriously knowing that it could have a detrimental impact on future business.  So, what options does a business have if it is hit with a bad review?

When business owners feel a review is either unfair or even false, one of their immediate reactions is to pursue legal action.  But before doing so, business owners should first consider tackling the bad review head-on and engage with the customer who posted it. That can show customers that the business values feedback and proactively aims to improve customer experience. This approach is especially helpful in cases where the customer’s honest review addresses a legitimate concern.

Can Businesses Remove or Restrict a Negative Online Review?

Most online reviews enjoy legal protection. Under the Consumer Review Fairness Act (“CRFA”), a business cannot restrict customers from reviewing the business either through a contract or website policies.

The CRFA prohibits companies from using contract provisions (or website terms and conditions) to impose limits on online reviews.  The attorney general’s office in each state, and the FTC enforce the CRFA and can impose financial penalties for violations, which can be treated similarly to an unfair and deceptive business practice.

Specifically, the Act makes it illegal for a company to use a contract provision that:

  • Bars or restricts the ability of a person—who is a party to that contract—to review a company’s products, services or conduct;
  • Imposes a penalty or fee against someone who gives a review; or
  • Requires people to give up their intellectual property rights in the content of their reviews.

However, companies can remove or restrict reviews under certain circumstances.  These include reviews that:

  • Contain confidential or private information
  • Are libelous, harassing, abusive, obscene, vulgar, sexually explicit or is inappropriate with respect to race, gender, sexuality, ethnicity or other intrinsic characteristics;
  • Are unrelated to the company’s products or services; or
  • Are clearly false or misleading.

Can Businesses Sue Online Platforms for a Negative Customer Review?

Negative reviews conveying false information may not enjoy the same legal protection as honest, truthful reviews. Before taking legal action, businesses need to identify the target of such legal action.

Online reviews are normally posted on various third-party websites, including social-media sites and review-crowdsourcing platforms, like Yelp or Trip Advisor. Some businesses may attempt to sue these websites.  However, in most cases, those attempts fail.

Section 230 of the Communications Decency Act­­––commonly known as “Section 230”–– addresses the liability of internet service providers (“ISPs”) and websites that host third-party content.  Generally, ISPs and websites are not liable for what users post even if they are moderating posts and a party was harmed by posts that were not removed.  However, websites can be liable for violations of criminal laws and intellectual property laws.

In addition to avoiding liability for failing to remove a post, ISPs and websites are also not liable when they edit or delete a post.  Websites can restrict content they deem “obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected,” as long as they act “in good faith.”

Given these broad protections, the best approach for businesses is to request the removal of the false reviews. That request in of itself, however, is no guarantee that the false review will be removed as online platforms are under no obligation to comply with these requests.

Can Businesses Sue Customers for Bad Online Reviews?

The fact that online platforms enjoy such protections does not mean that businesses are necessarily without recourse. When a negative review crosses the line from criticism to defamation, pursuing a defamation lawsuit may be a potential option. However, there is a legal threshold that must be met in order for a review to be deemed defamatory. Defamation is the publication or communication of a false statement of fact about a person to a third party, which causes harm to the person’s reputation.  In New York, defamation requires proof of the following four elements in order to succeed:

  • There was a false statement of fact;
  • The statement was published to a third-party without authorization or privilege;
  • The person being accused was at fault; and
  • As a result, there was some harm done to the accusing party – or the statement constituted defamation per se.

There are various defenses to a defamation claim, including that the statement was true, it was an opinion, it was privileged, or it did not cause any harm.  Additionally, online reviews are generally also protected by the First Amendment as well as various other laws, including the CRFA.

When it comes to defamation lawsuits, business owners should proceed with caution as these lawsuits tend to be complex, time-consuming, and costly.

So What Should Businesses Do if They Get a Bad Review?

Foremostly, businesses should first try to address the problem outside of litigation.  They should start by contacting the customer to resolve complaints, if possible.  If the business is unable to reach the specific customer, a possible next step is to post a polite response that offers a solution or indicates a desire to resolve the problem offline.  In most cases, it is almost always best for a business to refrain from engaging the customer in an online argument.

If the first two options fail, businesses can contact the website about removal if the review is factually inaccurate.  Even if the site is not required to remove it, it may agree to do it.  And lastly, continue to encourage happy customers to post positive reviews to counter negative ones.

If these efforts fail or a business owner believes the review is defamatory, it is best to contact an experienced attorney to explore possible legal action. Similarly, customers who are sued or threatened with a lawsuit because of online reviews should also consult an experienced attorney.


Photo by Jonas Leupe on Unsplash
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