Bad Online Reviews of Your Business: Harmful? Sure. Defamatory? Not So Sure.

If you own a small business and have customers and clients, there is a good likelihood that someone, somewhere has published an online review of your company and its goods or services. From Yelp to Angie’s List to TripAdvisor to any number of websites tailored to particular interest or industries, online reviews have proliferated in the past 5-10 years and can have a profound impact on your business. Even one negative review can be devastating when you consider that it may be seen by anyone doing even cursory research about your company. A 2011 Harvard study quantified just how big an effect negative Yelp postings can have: A one-star increase among reviews of Seattle restaurants led to a 5 to 9 percent growth in revenue.

Should I Sue?

You can find a lot of tips and do’s and don’ts online about how to handle such negative reviews from a strategic and business perspective. If a panicked and apoplectic client asks me whether we can sue the author of the negative review for defamation, the answer is, of course we can sue “IHateYourBusiness24/7” or whomever made the post, but the reality is that much of what is written in even the most scathing negative review will likely not qualify as actionable defamation. Furthermore, such lawsuits themselves can open up the business owner to further scorn, ridicule, and bad publicity in the fickle social media world.

As a preliminary matter, the owners of most online review sites and other platforms (Facebook, Yahoo, Google+, etc.) where comments may appear are immune from liability for defamatory comments in reviews as a matter of federal law. Section 230 of the Communications Decency Act shields such sites from claims based on comments posted by third parties.

What is Defamation?

In Connecticut, a defamatory communication, including an online review, is a false statement that tends to harm the reputation of another; to diminish the esteem, respect, goodwill or confidence in which that person or business is held; to deter third persons from associating or dealing with the person or business; or to excite adverse, derogatory, or unpleasant feelings or opinions against the person or business. (Connecticut Civil Jury Instructions 3.11-1)

Provable Fact v. Opinion

The most common issue that distinguishes an actionable defamation claim based on online reviews from one likely to fail is the issue of whether or not a statement was false. Only false statements of fact can be the basis of a defamation claim, not opinions. A statement of fact has to be able to be objectively proved or disproved.

For example, in a 2013 California case involving a disgruntled tenant commenting about this former landlord on Yelp, the comments that the landlord was “a sociopathic narcissist—who celebrates making the lives of tenants hell” was held to non-actionable opinion. However, other statements such as that the landlord sought to evict six tenants, including one who had made substantial improvements to the apartment; and that the landlord likely contributed to the deaths of three tenants “could reasonably be understood as conveying facts–each provable, and each meant to be used by prospective tenants to evaluate the [the landlord’s building] as a future residential choice.”

There are numerous nuances to the broad distinctions between statements of facts and statements of opinion, and as the court in the aforementioned case noted:  “The key is not parsing whether a published statement is fact or opinion, but ‘whether a reasonable fact finder could conclude the published statement declares or implies a provably false assertion of fact.’”

The Cloak of Anonymity

Most negative online reviews are posted anonymously, which makes identifying the person who wrote the allegedly defamatory statement a challenge in and of itself. This usually involves issuing subpoenas to the websites such as Yelp on which the comments were posted. However, both the websites and the reviewers who are the targets of the subpoenas can and usually do move to quash them on First Amendment grounds.

A decision issued just this month by a Washington state appellate court is an example of how anonymous posters can successfully use the First Amendment to maintain their cloak of anonymity. The court noted that while the First Amendment protects the right to speak anonymously, including online, it does not protect defamatory speech. Balancing these competing interests will therefore often require a plaintiff to present evidence of falsity of the statement, instead of resting on general allegations at even this early stage of litigation. If a plaintiff can’t meet that standard, they may never learn who the reviewer is.

Litigation is almost always costly, and pursuing a claim for defamation based on a bad online review is no exception. But the costs to a business in going after a reviewer can go far beyond legal fees and take on a life of its own in the consumer court of public opinion.

The bottom line for business owners is that a lawsuit in response to outrageous internet reviews and comments that make their blood boil and their businesses suffer may not be the best course of action. While certain false statements of fact in such comments can be the basis of a defamation claim, business owners should carefully consider how to proceed lest their response make a bad situation worse.