A Negative Customer Review Could Cost You Your House or Business!

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We have all had at least one unsatisfactory experience with a company or contractor. When emotions are high and you have reached your boiling point it is hard to refrain from sticking-it-to-‘em with a negative review on sights like Yelp or Angie’s List.

Letting others know about your bad experience is good, but be careful how you word your next Yelp review. It could land you a lawsuit! “Most people don’t know the legal nuances of how to write negative reviews without making defamatory statements,” says Eric Goldman, director of the High Tech Law Institute at Santa Clara University Law School in California. “Every time people post negative online reviews, they are betting their houses – in the sense that the criticized business can sue them and try to take their house.”

With more than 30 million user reviews posted to Yelp.com, businesses are starting to use the law to fight defamation, lost reputation, and lost business due to slanderous customer reviews.

Perez Vs. Dietz

This all started in Virginia when homeowner Jane Perez posted a negative customer review against contractor Christopher Dietz in the fall of 2012. Perez’s comments accused Dietz of stealing her jewelry and charging her for work that was never done. Dietz filed a lawsuit accusing Perez of defamation/slander.

Thomas Fortkort, the judge in the case, ruled that portions of the Perez’s review had to be removed from the web.

This case went to the Virginia Supreme Court. Judge Fortkort’s injunctions were overturned, with the court saying it was “not justified.” The Supreme Court sided with Perez that her negative customer review fell under, the First Amendment freedom of speech rights. This ruling has the case going back to Judge Thomas Fortkort who can set a trial in the case.

These litigations are important because they can determine the fate of discussions on the internet including if a contractor or company has a right to protection against slanderous reviews or if customers have a right to use their Freedom of Speech. 

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How to Protect Business

One of the best ways to protect your business from negative reviews is to do your due diligence. Protect your business by making sure you are covered for personal injury in your General Liability or Professional Liability Insurance Policies. 

Other ways to elude even getting a negative review is to create a work environment tailored to customer satisfaction, ask the customer what you can improve on, and settle conflicts diplomatically with witnesses and paper work showing both parties agreements. 

If you do get a negative review, respond to it in a private message or phone call. Most of the time the reviewer will be surprised you contacted them, embarrassed that they were so harsh, and understanding and even forgiving of any lapses in your businesses customer satisfaction. Most of those providing negative reviews just want to be heard, give an apology, and an offer to fix problem.

How to Protect Yourself

If you find yourself wanting to write a negative review follow these tips to protect yourself from being sued;

* Focus on the Facts
* Share Personal experiences
* Stay away from overarching broad statements
* Be specific (bad customer service, too expensive, bad finished product)

An example of a defamatory review:

Everyone at Blank’s Business is an incompetent, blubbering, fool! It took them a week to do one simple task and then when they were finally finished it was done WRONG! To top it off they charged me Extra! Do not go to these guys they are horrible!
An Example of a Correctly Written Review:

I was not pleased with the customer service or price of Blank’s Business. It took a week for my project to be completed where I have had this type of project completed in less than two days at Competitor’s Business. I was also surprised by the cost, it cost $ more at Blank’s Business to do the same project as Competitor’s Business.

An Example of a Business Response to a Negative Review:

I am sorry Unhappy Customer. We understand that our completion of your project did take longer than normal because of the Holidays with our staff taking vacations and the increase in work flow. We apologize for inconveniencing you. I also wanted to address our cost. We have to charge more for our services because we use special ink that does not run and special paper that never crinkles to give our customers the best finished project possible. We are giving you a $ coupon off your next project as a way to say sorry. We appreciate your business. Thank You, Blank Business

Source: Insurance Journal, Consumers Posting Negative Reviews Could Face Legal Issues, by Mitch Lipka, January 7, 2013

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Categories: Personal / Advertising Injury

Cyberbullying: Possible Denial Of Insurance Coverage

As cyberbullying increases, so do the concerns of whether injuries resulting from these harassments or threats will be covered under Homeowners or Personal Umbrella policies. Typically, parents are not aware of these activities by their children until legal action is taken, which could result in the loss of savings, personal effects, homes, or automobiles.

The injuries that result from cyberbullying may or may not be covered under a personal insurance policy based on state and individual policy forms. Typical injuries that occur are emotional distress, apprehension, fear, or mental injury; all of which may not be classified under “bodily injury” as defined in a Homeowners policy. “Bodily injury” is usually defined as physical bodily harm such as a broken bone; however, some states define “bodily injury” to include emotional distress.

Personal injury liability could provide coverage for allegations of slander, libel, or invasion of privacy; however, it is not automatically included in a Homeowners policy. Purchasing a separate Umbrella policy, or adding an endorsement to a Homeowners policy could add this coverage. Also be aware that there is an exclusion for statements that arise out of oral or written publication under the direction or by an insured with knowledge of its inaccuracy, or knowing that the act would violate the rights of others.

In the event that emotional distress, anxiety or mental injury is not classified as bodily injury, insureds are not likely to have protection against legal costs under their personal insurance policies. In order to reduce the risk in losing assets, time, expense, and aggravation of legal action arising from cyberbullying, parents should use precautions when their children use electronic devices.

Source: Rough Notes; Donald S. Malecki; July 2012

2 votes, 2.50 avg. rating (60% score)
Categories: Loss Control, Personal / Advertising Injury, Risk Management

Fax Blast Class Action Lawsuits

In the recent Florida Supreme Court case of Penzer v. Transportation Insurance Company, the court ruled that the standard General Liability policy form covers lawsuits alleging that fax blasts are in violation of the federal Telephone Consumer Protection Act (TCPA).

 In this case, a class action lawsuit was filed against Nextel (or its agent) for sending unsolicited fax blasts in violation of the TCPA. The TCPA is a federal law making it unlawful to use a fax, computer, or other device to send an unsolicited advertisement to a fax machine. Each fax sent in violation can result in the greater of actual damages or $500.
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Categories: General Liability, Personal / Advertising Injury

Tech Company Personal / Advertising Injury Coverages

The standard General Liability policy covers “personal injury” and “advertising injury” unless the insured is in the business of advertising, broadcasting, publishing, or telecasting. For this reason, there is no coverage for IT firms that are in the business of designing websites, determining content, providing content, or providing internet access.

Why do tech firms need coverage for “personal injury”? First of all “personal injury” coverage may be needed to protect a tech firm against an allegation of slander, libel, or oral or written publication that violates a person’s right of privacy. It is not too difficult to see how a tech firm could get sued under these circumstances.
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Categories: Cyber Liability, Errors & Ommissions, Personal / Advertising Injury, Professional Liability