SALT LAKE CITY — “Read the fine print,” they always say.
But how often do you actually do that?
Last month, FOX 13 told you about what to look out for before signing a contract, whether it’s for work being done on your home or a big purchase. There’s something else in those heftier contracts you should be watching for.
And if you find it, you probably should not sign on the dotted line.
“Some form contracts have a clause in it that says that you are not allowed to leave a negative review about the company and if you do, the company has a right to come after you,” said Katie Haas, the director of Utah’s Division of Consumer Protection.
That would be a nondisparagement clause and it could come back to bite you.
“If you leave us a negative review then we have a right to get $5,000 from you, or $10,000. They’re hefty,” says Haas. “The Federal Trade Commission, which is our federal partner, has said that those form contracts with non-disparagement which means I can’t speak badly about you, I can’t give an honest review about you, those types of contracts are void.”
They are, in fact, straight-up illegal, and Haas said if you come across one in a contract, report it to the Division or the Federal Trade Commission (FTC) and tell the company you can’t sign if the clause is there.
One of the most notable examples of this in action hits close to home.
“There was a major home construction case you may remember a few years back when the homes fell off the cliff,” says Haas. “A lot of those contracts had that clause in them, so people did not feel like they were able to report what they were seeing honestly or leave reviews about that home builder. You can understand why that’s a problem for the state, especially if they’re discouraging people from reporting it to authorities.”
What you, as a consumer, can do if you do find yourself in the middle of a disparagement situation is talk it over with the company.
“If you’re owed a refund, they can’t condition the refund on you not speaking badly about them. If you’re owed a refund, you’re owed the refund however, sometimes you’re just talking about settling it out. There’s a lot of gray area about whether you’re owed a refund and they just want to make you go away, they want you to sign something that says, ‘Okay, you can go away, but you can’t speak badly about us’, then you can do that,” says Haas.
You might be wondering if there’s ever a time when non-disparagement clauses are permissible.
They are allowed in employment contracts, so don’t be surprised if you see them there.
