What are the hotels on? In some highly publicized cases in the US and the UK, hotels seem to be at the forefront of trying to limit negative reviews on social media though clauses in their standard terms and conditions, and also imposing financial penalties for doing so.
It may seem tempting to do this – review sites such as TripAdvisor increasingly influence purchase decisions and unfair negative reviews are hard to undo.
The US case is analysed here.
For the UK case, the money has reportedly been refunded and UK Trading Standards officials made clear that they regarded the clause as unfair. So are these clauses just ill-judged or actually illegal?
If the posting is untrue and defamatory then there exist other remedies under the UK Defamation Acts. A hurdle of “serious harm” needs to be reached in order to bring an action and there are defences of “honest belief” that may make this harder to sustain. On the other hand, the 2013 Defamation Act provides a specific – though clunky – process for acting against defamatory statements on the web which TripAdvisor would have to collaborate with.
2. Unfair Contract Terms
Most likely, however, such a statement will be a matter of opinion and not defamatory as such. So can the establishment owner try to: (i) impose a contract term which gags the guests; and (ii) make a breach subject to a financial penalty? All this assumes that the clause was incorporated into the contract; unusual or onerous terms might need to be specifically brought to the consumer’s attention in order validly to form part of the contract.
If we look at UK unfair contract terms law (Unfair Terms in Consumer Contracts Regulations) we see that the main target is:
“A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”
There are several points here: (i) the term must not be individually negotiated (rare anyway in consumer contracts and the regulations reinforce this); (ii) it must be contrary to the requirement of good faith (this in itself is a novel concept in English law – English courts and commentators associate it with fair and open dealing, and assessing the clause in the light of all relevant circumstances of the making of the contract as well as its content); and (iii) it must cause a significant imbalance in the rights of the parties; (iv) disadvantaging the consumer.
In a schedule, the Regulations set out a list of sample terms that may be unfair. Potentially relevant to this case we see:
(b) inappropriately excluding or limiting the legal rights of the consumer vis-à-vis the seller or supplier or another party in the event of total or partial non-performance or inadequate performance by the seller or supplier of any of the contractual obligations (…);
Arguably, this would only apply if the hotel owner had genuinely underperformed and not if the consumer was just unimpressed. Also we might have a debate over whether the consumer has a “legal right” to complain on TripAdvisor.
(e) requiring any consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation;
This would seem to cover this case – the obligation is not to complain and the “damages” recovered were several times the cost of the night’s stay. This is interwoven with the law against penalties but it is not necessary that the clause be an illegal penalty in order to be unfair.
(0) obliging the consumer to fulfil all his obligations where the seller or supplier does not perform his;
This is a similar point – but only if the service provided genuinely did not meet the required level.
So it seems, where the level of service was within the contractually agreed or legally required levels, the examples are not 100% helpful and we may need to come back to the general prohibition on “imbalance”, “detriment”, “contrary to good faith”. Do we have those here? It seems fairly clear that we would, also taking into account: (i) the level of the penalty in comparison with the cost of the service; and (ii) the fact that the hotelier has the unilateral means of charging the guest’s credit card at will for this concept.
Of course, non-publicity or “non-disparagement” clauses are common outside of consumer contracts – agreements to settle disputes, including in employment cases, usually need to have this and like NDAs they are enforceable. And a consumer could be party to one of these. They might usually be individually negotiated but we could envisage cases where e.g. an ISP suffered a service failure and offered compensation but made its acceptance conditional upon the users not making negative public comments. That might pass the fairness test. However, at the root of the whole discussion is the vanity of trying to use legal coercion to manage PR rather than striving for better customer service and constructively responding to criticism even if unfair. Like it or not, like Ms. Streisand, providers of consumer goods and services need to realise not only that information always circulates but that internet users regard it is their right or even their duty to tell all.