When Does a Business Review Constitute Defamation?

By: R. Daniel Johnson

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As the business world continues to evolve, one increasingly important aspect of business success is the online reviews left by customers. Customer satisfaction has always been a main priority for small and large businesses, but when does the old saying that “the customer is always right” go too far? With the advance of technology, the availability of public comment on business performance is at an all-time high. While this new access to information has given customers the ability to make fully informed decisions, can it also be abused? Seventy-nine percent of people say they trust online reviews as much as hearing the review from a friend or relative, meaning that most of the population will accept the review at face value. However, it is estimated that one out of every seven reviews on TripAdvisor is fake. The proliferation of fake reviews posted online is leading to a massive amount of exposure to false information for consumers. Fake reviews can take many forms, but one common occurrence is for a competitor to launch an attack on a business using its employees and whoever else they can find to post 1-star reviews. That’s exactly what happened to Cameron Woodsum, the owner of a company called Bill Slasher. Woodsum’s company was suddenly attacked with negative reviews on its Facebook page by a competitor’s executives, employees, and employee relatives. This attack resulted in Woodsum’s average rating dropping from 4.9 to 2.5 in a matter of hours. But there is hope! Luckily, there are avenues that a business owner can take to remove fake reviews.

One of the most common options is for these websites to offer a reporting system or even have algorithms to pinpoint and remove fake reviews. However, in the case of Woodsum, this proved unfruitful. After reporting several reviews and attempting to have them removed, Facebook did not respond nor remove any of the reviews. The system may work in some cases, but it has often reported difficulties in identifying the correct reviews to remove. A Google representative reported that they are working on the problem, but have had several setbacks.

There is, however, another option. Business owners have realized that these fake reviews are ripe for a defamation claim. While states may differ in small ways, the majority of states operate with the following defamation framework. To establish a prima facie defamation claim, a business must prove that there was: (1) a false statement purporting to be fact; (2) publication or communication of that statement to a third person; (3) fault amounting to at least negligence; and (4) damages, or some harm caused to the person or entity who is the subject of the statement.

There are two types of defamation: libel and slander. The former represents statements made in writing, while the latter references spoken words. Because online reviews are in written form, they typically fall under the libel category.  When dealing with a libel defamation claim, the plaintiff must prove actual malice in addition to the four elements above. This standard does not involve revenge or anger but merely establishes that the person making the statements either knows that it is false, or acts with reckless disregard as to the truth of the statement.

One major area of concern for businesses attempting to make a defamation claim is establishing economic harm. To establish economic harm, the review has to have hurt the reputation of the business to such a degree that it may deter others from associating with that organization. Certain statements, such as falsely claiming physical harm or that the business is an outright scam are presumed to be defamatory.

A business owner can rest easy knowing that they are not at the mercy of anyone who wants to do them harm by posting false reviews online. Courts have given business owners an option outside of waiting for large tech companies to sort through all of their material. Business owners have the option to pursue legal action if they wish to take the future and reputation of their businesses into their own hands.