Earlier this month, California became the first state to pass legislation that further protects a consumer’s right to post a truthful review online. AB-2365, authored by State Assemblyman John A. Perez, was signed by Governor Jerry Brown on September 9 and creates Civil Code, section 1670.8. That section imposes penalties on persons who attempt to get consumers to waive their right to make statements about the services or goods in a contract. The law is intended to curb a trend in anti-consumer contracts where consumers are asked to sign a contract waiving their rights to post review. In one widely reported instance, a dentist asked patients to assign to the dentist the copyright of any online review and imposed daily penalties of $100 for failure to comply. In another case, a Utah copy was forced to pay a six figure judgment following their negative review of KlearGear over a $20 desktop toy. The KlearGear contract had a non-disparagement clause in it. Under the new California law, any contractual provision that includes a waiver of a right to make statements about the goods or services is declared unlawful and may result in civil penalties of between $2,500 and $10,000 for each violation.
The full text of Civil Code, section 1670.8 is below:
(a) (1) A contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.
(2) It shall be unlawful to threaten or to seek to enforce a provision made unlawful under this section, or to otherwise penalize a consumer for making any statement protected under this section.
(b) Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable.
(c) Any person who violates this section shall be subject to a civil penalty not to exceed two thousand five hundred dollars ($2,500) for the first violation, and five thousand dollars ($5,000) for the second and for each subsequent violation, to be assessed and collected in a civil action brought by the consumer, by the Attorney General, or by the district attorney or city attorney of the county or city in which the violation occurred. When collected, the civil penalty shall be payable, as appropriate, to the consumer or to the general fund of whichever governmental entity brought the action to assess the civil penalty.
(d) In addition, for a willful, intentional, or reckless violation of this section, a consumer or public prosecutor may recover a civil penalty not to exceed ten thousand dollars ($10,000).
(e) The penalty provided by this section is not an exclusive remedy, and does not affect any other relief or remedy provided by law. This section shall not be construed to prohibit or limit a person or business that hosts online consumer reviews or comments from removing a statement that is otherwise lawful to remove.