Protecting Brand Image or Gaming the System? Consumer ‘Gag’ Contracts in an Age of Crowdsourced Ratings and Reviews
Lucille M. Ponte
Traditionally, businesses developed and controlled brand image through company-sponsored advertising and marketing campaigns. With the rise of social media, brand communications have become more interactive, especially on crowdsourced review sites. This increased interactivity helps companies to gain valuable insight into the consumer experience and to improve their brand image and customer engagement. Businesses soon learned that positive consumer ratings and reviews often translated into enhanced brand reputation and increased revenues. Some merchants and professionals seek to burnish their brand image by paying for positive reviews while others try to silence disgruntled customers through adhesive nondisparagement clauses. These gag clauses may rely upon dubious intellectual property claims, monetary penalty clauses, and other financial threats in order to prevent unhappy consumers from posting negative reviews. Certain businesses justify these provisions as legitimate actions needed to protect their brand image and goodwill in a social media environment fraught with fake negative reviews from unscrupulous competitors and libelous consumers. This paper examines the rise of consumer nondisparagement clauses and considers the legality of such agreements under contract, free speech, and intellectual property principles. Issues of freedom of contract and concerns about deceptive advertising, fair use, and copyright misuse are also addressed. This article concludes with a review of self-regulatory proposals that balance freedom of contract and legitimate branding concerns with customer speech interests and issues of good faith and fair dealing.