January 29, 2021   New Jersey Law Journal

Good Faith and Fair Dealing Bar to Abusive Online Reviews

An abusive review is a violation of an implied obligation in all contracts. If an internet consumer entered into a contract for the sale of goods or services, a duty of good faith and fair dealing springs into existence.

By Jonathan Bick | Jonathan Bick is counsel at Brach Eichler in Roseland. He is also an adjunct professor at Pace and Rutgers law schools, and the author of “101 Things You Need to Know About Internet Law” (Random House 2000).

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The meteoric rise in the dimensions of e-commerce have been matched by internet reviews posted on Yelp, Amazon, TripAdvisor, Facebook and Twitter. Positive reviews enhance a company’s profitability, while negative reviews harm them. Some harmful internet reviews are, in fact, legally abusive. Statutory, contract-related breach of “duty of good faith and fair dealing,” and tort legal remedies are available to combat abusive internet reviews.

Cornell University research suggests that e-commerce participants are more inclined to be swayed by recommendations posted on the internet than any other recommendations, other than personal firsthand experience and recommendations from friends and family. Thus, abusive internet reviews can have significant adverse consequences.

The authors of abusive internet review typically go beyond describing factually negative difficulties associated with their personal experiences with a merchant’s goods, services or customer service. Said reviews are platforms for unrelated and typically disingenuous grievances expressed in vitriolic hyperbole.

Abusive Internet reviews, are also known as cyber-harassment, cyberbullying, trolling, flaming, etc. They all have interchangeable characteristics, namely that they include pervasive or severe targeting of an individual or group online through harmful content.

The first defense is statutory, namely the Consumer Review Fairness Act (CRFA) of 2016. Subsection (a) of the CRFA states that the Act “covered communication,” which the Act defines as “a written, oral, or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party.” Consequently, virtually any type of consumer review that exists is covered, whether traditional or internet.

While the CRFA on its face protects people’s ability to share their honest opinions about a business’s products, services or conduct in any forum including social media, it also protects e-commerce providers from abusive internet reviews. The CRFA simultaneously bars contracts (both traditional or internet) that prohibit honest reviews, or threaten legal action over them, harm people who rely on reviews when making their purchase decisions, and take action against abusive Internet reviewers.

While the term “abusive” is not defined in the CRFA, the Act allows action for postings that are abusive. More  specifically, the CRFA allows firms to use a contract provision that:

Bars or restricts the ability of a person who is a party to that contract to review a company’s products, services or conduct;

Imposes a penalty or fee against someone who gives a review; or

Requires people to give up their intellectual property rights in the content of their reviews.

The Act includes specific instances of abusive internet reviews including those that:

Contain confidential or private information, for example, a person’s financial, medical, or personnel file information or a company’s trade secrets;

Are libelous, harassing, abusive, obscene, vulgar, sexually explicit, or inappropriate with respect to race, gender, sexuality, ethnicity or other intrinsic characteristic;

Are unrelated to the company’s products or services; or

Are clearly false or misleading.

Thus, the CRFA may be a basis for damages, self-help, and court orders.

The most common examples include false postings and posting wherein no goods or services from the merchant were purchased in the first place. In such cases, the posting is actionable.

In addition to the CRFA, both contract and tort remedies are available to challenge the behavior of parties who use the internet to post virulent, gratuitously hyperbolic harmful reviews. Both involve the legal concept of  the duty of good faith and fair dealing.

In the case of contracts, the duty of good faith and fair dealing is recognized by both the Restatement (Second) of Contracts and by the Uniform Commercial Code (UCC). In particular, Section 205 of the Restatement provides that every contract imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement, and UCC §1-304 states that every contract imposes an obligation of good faith in its performance and enforcement. In short, both require honesty in fact and the observance of reasonable commercial standards of fair dealing.

The duty of good faith and fair dealing is applied to transactions where one party has some manner of discretion to act in a way that affects the rights of another party. The UCC addresses the issue. “Every contract or duty within this Act imposes an obligation of good faith in its performance or enforcement.” See N.J.S.A. 12A:1-203. Good faith is generally defined as “honesty in fact in the conduct or transaction concerned.” See N.J.S.A. 12A:1-201(19). This interpretation has been adopted from New Jersey to California. See Sons of Thunder v. Borden, 148 N.J. 396 (1997), and Locke v. Warner Bros., 66 Cal. Rptr. 2d 921 (1997).

Consequently, the duty of good faith and fair dealing is applicable to abusive internet reviews. Simply put, an abusive review is a violation of an implied obligation in all contracts. Thus, if an internet consumer entered into a contract for the sale of goods or services, a duty of good faith and fair dealing springs into existence.

The posting of a negative internet review constitutes notice of a potential claim against the merchant. As such, the duty of good faith and fair dealing applies. It may be argued that by leaving an abusive review related to the purchase of a good or service, the party posting said abusive review is exercising their discretion by commenting on the purchased goods or services.

From a tort perspective, if an abusive posting was made when  no goods or services from the merchant were purchased in the first place, said posting is most likely actionable as defamation. In the case of abusive internet reviews (particularly those that are false), the First Amendment does not protect such postings.

The U.S. Supreme Court has clearly held that tort actions can implicate the First Amendment. As noted by the Supreme Court in Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990), a published statement is an opinion that merits First Amendment protection when it is (1) about a matter of public concern, (2) expressed in a way that makes it hard to prove whether it is true or false, and (3) cannot be reasonably interpreted to be a factual statement. Thus, the  Supreme Court has found that while uninhibited, wide open, caustic, vehement, and unpleasantly sharp attacks are protected (FEC v. Wisconsin Right to Life, 551 U.S. 449 (2007)), falsehoods are not (Osenblat v. Baer, 383 U.S. 75 (1966)).