Consumer • March 24, 2023 ∙ 6 min read ∙ View 8

Non-Disparagement Clauses and Honest Reviews: Guide to Consumer Protection

The rise of online reviews has made it easier for consumers to decide where to spend their money.

However, the prevalence of non-disparagement clauses in contracts has become a growing concern for the Federal Trade Commission (FTC) and consumer reviews websites.

This guide provides businesses with tips on handling negative reviews while avoiding the legal and ethical pitfalls of non-disparagement clauses.

The Risks of Non-Disparagement Clauses:

Non-disparagement clauses violate the Consumer Review Fairness Act (CRFA).

These clauses bar customers from providing honest opinions about a business’s products, services, or conduct in any forum, including social media.

Companies found using non-disparagement clauses could face legal action from the FTC, and those with accreditation from the BBB could lose their status.

Also, non-disparagement clauses erode consumer trust and could harm a business’s reputation.

The Importance of Honest Reviews:

Open and honest communication between businesses and customers is necessary for an ethical marketplace.

Honest reviews allow customers to make informed decisions, and companies have an opportunity to address their shortcomings, improve their reputation, and rebuild trust.

Responding promptly and respectfully to negative reviews is crucial to show customers their feedback is valued.

Fashion Nova has settled allegations with the Federal Trade Commission that it suppressed negative product reviews on its website.

The online fashion retailer has agreed to pay $4.2 million and is prohibited from suppressing customer reviews of its products.

It is also required to post all customer reviews of products currently being sold on its website, with exceptions for certain types of content.

Tips for Handling Negative Reviews:

  • Respond promptly to negative reviews.
  • Be respectful when responding to negative comments.
  • Claim your business profiles on as many platforms as possible.
  • Tell the customer how to contact you.
  • Businesses can remove or prohibit abusive, vulgar, or threatening reviews.
  • Encourage customers to leave reviews.
  • Give it time.

Handling negative reviews can be challenging, but it’s important to respond professionally and effectively to maintain your brand’s reputation and address any concerns or issues that customers may have. Here are some tips for handling negative reviews:

  1. Respond promptly and professionally: Responding to negative reviews promptly and professionally is essential. Acknowledge the customer’s complaint and apologize for any inconvenience they may have experienced. Avoid being defensive or dismissive, and offer to help resolve the issue.

Example: “We’re sorry to hear about your experience with our product. We apologize for any inconvenience this may have caused and would like to help resolve the issue. Please reach out to us directly so we can assist you further.”

  1. Take the conversation offline: If possible, try to take the conversation offline to address the customer’s concerns privately. This can prevent further escalation and allow you to handle the issue more effectively.

Example: “Thank you for bringing this to our attention. We want to assist you further, so please get in touch with us directly via email or phone so that we can address your concerns.”

  1. Provide a solution: Offer an answer or resolution to the customer’s complaint. This could involve offering a refund, exchange, or other compensation.

Example: “We would like to offer you a full refund for your purchase. Please let us know how we can proceed with this.”

  1. Learn from feedback: Negative reviews can provide valuable feedback on areas where your business can improve. Use this feedback to make changes and address any issues that may arise in the future.

Consumer data: According to a study by BrightLocal, 91% of consumers read online reviews before making a purchase decision, and 84% trust online reviews as much as personal recommendations.

FTC data: The Federal Trade Commission (FTC) requires that businesses not make false or misleading claims in their online reviews. Disclose any material connections, such as receiving compensation or complimentary products, when posting reviews.

Review site data: Many review sites, such as Yelp and Google Reviews, have guidelines and policies for handling reviews. Familiarize yourself with these guidelines to respond appropriately to negative reviews.

Statistics:

  • 97% of consumers read company responses to reviews.
  • More than 80% of people thought reviews over three months were irrelevant.
  • 60% of 18 to 34-year-olds only consider reviews written in the past two weeks.

According to a study by BrightLocal, 87% of consumers read online reviews for local businesses in 2020, and the average consumer reads ten reviews before feeling able to trust a company.

The study found that 92% of consumers will use a local business with a 4-star rating, while only 13% would use a company with a 1- or 2-star rating.

For example, let’s say a customer leaves a negative review on a restaurant’s Yelp page, saying that the food was cold and the service was slow.

The restaurant could respond by acknowledging the customer’s concerns and apologizing for the negative experience.

They could offer to rectify the situation by providing a free meal or discount on their next visit. The restaurant shows that it cares about its customers and is willing to make things right.

This could encourage the customer to return and leave a positive review.

On the other hand, if the restaurant were to ignore the negative review or respond defensively, it could discourage other potential customers from visiting.

According to the BrightLocal survey, 62% of consumers say they are more likely to do business with a company that responds to online reviews, while only 21% say they would still use a business that does not respond.

Brightlocal.com

In another example, a customer could leave a negative review on a contractor’s Google My Business page, saying they did poorly on a home renovation project.

The contractor could respond by acknowledging the customer’s concerns and offering to come back and fix any issues.

This shows that the contractor values their customer’s opinion and is willing to work to make things right.

If the contractor does not respond or responds defensively, it could discourage potential customers from using their services.

In conclusion, businesses need to handle negative reviews professionally and constructively. Companies can build trust with their customers and improve their reputation by responding promptly, being respectful, and offering to rectify any issues.

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