Earlier this week, the New York Post reported that the Union Street Guest House, a hotel in Hudson, New York, had a unique method of controlling negative reviews online. According to the New York Post, the hotel's website stated that “If you have booked the inn for a wedding or other type of event . . . and given us a deposit of any kind . . . there will be a $500 fine that will be deducted from your deposit for every negative review . . . placed on any internet site by anyone in your party.” However, the money would be refunded if the negative review is removed.
Effectively, this policy means that if a wedding guest posted a negative review of the hotel on the internet, then the couple whose wedding took place at the hotel would be fined $500.
Although the hotel's owner stated that the company policy was a joke, a Yelp review from November 12, 2013 (notably several months before the New York Post article) states that the reviewer received an email threatening to enforce the policy.
Businesses are always seeking to protect their reputations, especially online. However, this hotel's policy is not legally sound.
Challenging the hotel's policy
Should the hotel have enforced this policy, it could have been successfully challenged in court as the policy is an unconscionable contract. New York courts have defined an unconscionable contract as being "so grossly unreasonable...in light of the mores and business practices of the time and place as to be unenforcible [sic] according to its general terms" (Gillman v. Chase Manhattan Bank, N.A., 73 N.Y.2d 1, 10, 537 N.Y.S.2d 787, 791 ).
In order to determine whether a contract is unconscionable, New York courts utilize the following two-part test:
Essentially this means there must be a showing of an absence of meaningful choice with contract terms that are unreasonably favorable to one party. The substantive element allows a court to analyze whether the contract unreasonably favors the Defendant.
Should the Union Street Guest House's policy be challenged in court, it would fail the above test. Procedurally, it does not appear as if a complaining party would have had any choice to enter into the contract if they wished to hold a wedding at the hotel. Nothing has been reported as to the negotiability of this policy, and placing the policy on the hotel's website creates the impression that it is a standard policy of the hotel.
However, analysis of the substantive element provides much stronger evidence for the policy to be found unconscionable. First and foremost, it is unclear whether any couple holding a wedding at the hotel was made aware of the policy. If the policy truly was a joke as the hotel owner stated, then it likely would not have been found on, or annexed to, any of the other contracts the couple would have signed. Additionally, should the policy have only been located on the website, it can be argued that the hotel was deliberately hiding the policy from couples seeking to hold their weddings at the hotel.
The terms of the policy, as written, are unreasonably favorable to the hotel. The policy has the effect of limiting the speech of third parties to the contract, which is odd, unexpected, and a violation of society's mores and business practices. On public policy grounds, the court would likely find the policy unenforceable because society wants to encourage speech about businesses to empower consumers.
Potential recourse for Union Street Guest House's negative viral publicity
Shortly after the New York Post article was published, news of the hotel's policy went viral on the internet. As a result of this negative viral publicity, internet users quickly took to websites such as Yelp to post one star reviews citing the hotel's policy for negative reviews as the reason.
Although approximately 5 pages of such reviews on Yelp have been removed in the past few hours, there are negative reviews that have been posted subsequent to the hotel's viral publicity that discuss previous stays at the hotel. Should these reviewers be lying in their negative posts, the hotel could potentially have recourse against them. As previously discussed here, businesses can sue reviewers for false, negative reviews on defamation grounds.
If some of the recently posted negative reviews are based on lies, it would be difficult for the hotel to succeed. One of the elements of a defamation claim is proof of damages that resulted from the false statement. Given the fact that the hotel has experienced a great deal of negative publicity in the past few days, it would be extremely difficult to prove that any false reviews caused damage to its business. Nonetheless, the hotel should continue to monitor its reviews, especially as time distances the hotel from its viral notoriety.
It is difficult for businesses to protect their online reputations, but they should employ legally sound measures to do so. Instead of threatening $500 fines, the Union Street Guest House should have engaged its negative reviewers in a positive manner. If the hotel received negative reviews that contained lies, it could have then proceeded with a defamation suit against those reviewers. Hopefully, the Union Street Guest House's policy to limit negative reviews, and the viral notoriety it spawned, serves as a cautionary tale to other business owners.
This afternoon, I will be attending an event which focuses on the latest iPad solutions for retailers. I have seen several stores around Manhattan which use iPads as point of sale terminals instead of the old-fashioned cash registers, which makes sense as iPads are user-friendly and the apps are flexible in design. However, in a time where there is seemingly a major privacy leak every few months, the use of an iPad in point of sale transactions raises privacy concerns for the consumer and retailer, such as:
Social media sites like Facebook, Twitter, and Instagram have pervaded every aspect of modern society. Not surprisingly, businesses have (and should have) utilized social media to increase their brand recognition and connect with their consumers. However, social media use for businesses can be risky. Unlike personal profiles, business profiles tend to have several users who can add content. Allowing multiple people to post for a business profile increases the business' risk of inappropriate use of its page. Simply put, no business wants an unhappy employee to be able to post on their social media pages. A single inappropriate post (even if well-intended) can quickly become viral on the internet and damage the business' brand.
Click here for a few examples of social media blunders by well-known brands
In order for a brand to avoid similar scenarios and promote itself in the best light possible, businesses should have a social media policy. Such a policy can establish who has access to posting content, guidelines for appropriate posts and replies, how frequent posts may be made, and potential repercussions for violating the policy. Social media policies may also establish rules by which employees must abide in discussing the business or brand on their personal pages.
By establishing a set of rules by which employees must abide when engaging in social media on behalf of the company, the company can effectively limit its risk and avoid unintentional mistakes which may hurt the business. Unfortunately, the only way to avoid the malicious, intentional, social media postings is for a business to select employees it deems responsible and consistently reevaluate the employees' access.
Nothing can completely insulate a business from social media mistakes. However, social media policies can help avoid unintentional mistakes and create a unified voice for the brand.
Quiles Law is an esports-focused law firm based in New York City.
1177 Avenue of the Americas
New York, NY 10036
(P) (917) 477-7942
(F) (917) 791-9782
Attorney Advertising. The information presented in this site should not be construed to be formal legal advice nor is it intended to form any attorney/client relationship. Our attorneys are licensed to practice law in the States of New York and New Jersey. Copyright Quiles Law, 2020. All rights reserved.