Anti-gag clause legislation is an issue to watch.
The ‘Right to Yelp’ Is Now Maryland Law
In 2016, Maryland became the second state to pass a law that prohibits businesses from using consumer non-disparagement clauses, or gag clauses.
In the past, some businesses have inserted these clauses into the fine print of service agreements with customers, and if customers post negative reviews on sites like Yelp or TripAdvisor, the business can threaten legal action or pursue financial penalties. Under Maryland’s new law, businesses who use gag clauses will now be subject to civil and criminal penalties, but the law also includes protection for merchants by banning customers from publishing proprietary information or trade secrets about the business.
Karen Harned, executive director of the NFIB Small Business Legal Center, told Pew Charitable Trusts that NFIB has not taken a position on anti-gag clause legislation, but we are monitoring it closely.
“Many small businesses can’t afford to hire an attorney and bring a lawsuit against an ax-grinding customer who writes nasty reviews,” she said. “Online sites often allow reviewers to remain anonymous, and a single consumer with a grudge can write numerous negative posts and harm a business’ reputation.”
On the flip side of the coin, small business owners are very supportive of the First Amendment, so the use of gag clauses presents freedom of speech concerns.
California was the first state to pass an anti-gag clause law in 2014, and several other states—Massachusetts, New Jersey, Oklahoma, and South Carolina—have considered similar legislation that hasn’t passed. Nationally, a federal bill that would ban gag clauses is also moving through Congress.