What Happens If Negative Online Reviews Affect Your Business?

Imagine that you’re trying to grow a new business in southwest Michigan. Your advisors encourage you to establish a presence on sites such as Yelp.com, Avvo.com and YahooLocal.com so that customers can provide reviews of your services (or products) so that potential customers can see how great you are. With positive reviews, potential customers are more likely to give you business.

Sounds like a great idea, right? For many business owners, it is; but social media can have its downsides too. Essentially, negative reviews have the potential to drive customers away just like good reviews can attract them. So if a negative review leads to fewer business opportunities, can an ailing business seek compensation from the reviewer?

Like many legal questions…it depends. Generally, Michigan law protects speech that is truthful about a particular product or service. However, a recent lawsuit may have an effect on the ongoing definition of slander and how it relates to future business relationships. Essentially, a D.C. area contractor is suing a former client over her negative review of his services on Yelp.com. The contractor claims that he has lost at least $300,000 in business opportunities and wants the client to be held responsible.

At issue are the veracity of the statements (made by the contractor and the client) online. The client, in addition to being critical of the work performed, also suggested that some of her personal items were stolen. The contractor fired back and insisted that these statements were false. It remains to be seen who the jury will find for, but it does raise the specter of future lawsuits based on online reviews.

Source: ABC News.com “Scathing Yelp review could cost woman $750K,” Rebecca Jarvis, Jan.28, 2014


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