Is the customer always right? Negative customer reviews and the potential for litigation.
In a society fueled by online reviews from (purported) customers, negative reviews can have an impact on a business’s bottom line. A common question arises about how to stop a disgruntled customer from peppering online review websites and social media platforms with negative (and potentially inaccurate) reviews about your business. From a legal prospective, the answer is, unsurprisingly: it depends.
The First Amendment of the U.S. Constitution protects freedom of speech. However, false statements about a company which go to the company’s business, trade, or profession, are harmful to the company’s business relationships and business income, and are published to a third party, may be defamation and may be actionable by law.
The court determines whether an online review or statement is defamatory. The court will scrutinize the customer comment or review to determine whether it constitutes an expression of opinion or a statement of fact. If a customer writes a complaint (even inaccurately) about the subjective quality or satisfaction of services rendered or goods provided (e.g., “This company is terrible and does shoddy work!” or “These widgets were poor quality!”), this is generally an expression of opinion. Such statements are generally protected under the First Amendment and do not amount to defamation.
On the other hand, some customer allegations constitute statements regarding facts (e.g., “This company sold me the wrong building materials and my roof collapsed” or “This company agreed to finish the project six months ago, and it’s still not finished.”) These types of reviews are more than just subjective opinions. However, North Carolina courts have held that a statement that does not assert any illegal or wrongful activity by the plaintiff (here, the company), generally does not rise to the level of defamation recognized under North Carolina law.
If a customer states something like “This company defrauded me and stole my money” or “This company trespassed on my property,” these statements allege illegal and/or wrongful conduct and may be defamatory.
Even if a customer is making potentially defamatory statements online about your company, the potential cost of pursuing an action for defamation and proving the claim against the customer could far exceed a potential jury verdict. Further, defamation claims, without clear evidence of quantifiable business loss, are difficult to prove in terms of damages. Generally, from a business perspective, it may be more worthwhile to pursue more positive customer reviews that will outweigh the occasional negative review, versus litigating every negative customer review.
If you have any questions about this or you would like to discuss this topic further, please contact me.
SiteLink Software, LLC v. Red Nova Labs, Inc., 2018 NCBC LEXIS 90, *55.