The Right to Gripe

In the internet age, online reviews are a big deal. Before the advent of review sites such as Yelp, a displeased customer’s negative review traveled by word of mouth and likely reached only a handful of other consumers. See Wayne R. Barnes, “The Good, the Bad, and the Ugly of Online Reviews: The Trouble with Trolls and a Role for Contract Law After the Consumer Review Fairness Act,” 53 Ga. L. Rev. 549, 559 (2019). But today, the criticism of a displeased customer that is posted online has the potential to reach millions of other consumers. See id.

In an attempt to ward off negative online reviews, some businesses opted to include non-disparagement clauses in their terms of service, thereby prohibiting customers from writing negative reviews. See Clay Calvert, “Gag Clauses and the Right to Gripe: The Consumer Review Fairness Act of 2016 & State Efforts to Protect Online Reviews from Contractual Censorship,” 24 Widener L. Rev. 203, 209 (2018). California was the first state to prohibit businesses from contractually curtailing their customers’ speech. Enacted in 2014, California’s so-called “right to gripe” law provides that “[a] contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.” Cal. Civ. Code § 1670.8(a)(1). A contract cannot waive this prohibition on gagging customers’ speech. See id. § 1670.8(b) (“Any waiver of the provisions of this section is contrary to public policy, and is void and unenforceable.”).

Although the “right to gripe” law is over nine years old, we are just now starting to see the first lawsuits testing the law. In a class action suit filed against Bank of America (BOA), California consumers allege that the bank’s online banking service agreement violates the “right to gripe” law. Customers who signed up for and used BOA’s online and mobile banking services filed the suit against BOA. The customers allege that to use the services, they were required to agree to the bank’s online banking service agreement. The agreement allegedly contained terms that prohibited them from making statements that BOA considers to be “reputationally harmful” or “brand damaging.”

On January 12, 2024, BOA moved to dismiss the suit. BOA argued that online banking services like wire, bill pay, and Zelle, which it makes available without charge to its customers, do not involve the sale or lease of any goods and are thus outside the scope of the “right to gripe” law. BOA maintained that these services merely govern the ways in which customers may access and manipulate the money in their accounts, allowing them to purchase other goods or services. BOA sought dismissal of the complaint on the grounds that the “right to gripe” law does not apply to its online banking service agreement. In the alternative, BOA argued that even if the law were applicable to the online banking service agreement, the agreement does not in fact restrict a BOA customer’s right to post negative comments about the bank or its services. Instead, it only prohibits using the bank’s services to engage in illegal conduct, like financing terrorists or carrying out a Ponzi scheme. Thus, BOA maintained, the agreement governs conduct, not speech, and the plaintiffs relied on selective quotations to create a misleading impression of the relevant provisions of the agreement.

In their opposition to BOA’s motion to dismiss, the customers claimed that BOA’s reading of the agreement is overly narrow and that the agreement refers to numerous services that can be purchased, thus making it a contract for the sale of goods. The customers also maintained that the language of the agreement plainly restricts speech. On March 19, 2024, the court granted BOA’s motion to dismiss, holding that the customers failed to allege what goods or services were purchased such that the online banking service agreement covered those purchased goods or services. However, the court noted that if the customers contracted with BOA to buy goods or services and the online banking service agreement covered those purchased goods or services, then the “right to gripe” law would apply. Thus, in granting the motion to dismiss, the court also granted leave to amend. The customers filed their first amended complaint, and BOA has moved to dismiss. Briefing is currently under way on BOA’s motion to dismiss.

A similar suit against US Bank alleging violations of the “right to gripe” law is also proceeding in California. The suit against US Bank alleges that the bank’s digital terms of service prohibit users from making any statement or comment that “poses a threat to the reputation of [U.S. Bank].” On February 15, 2024, US Bank moved to dismiss the complaint, making arguments similar to those advanced by BOA. US Bank argues that the “right to gripe” law does not apply to its digital services agreement—which provides free digital financial services—because the agreement is not a contract for the sale or lease of consumer goods or services. US Bank further argues that the plain language of the digital services agreement does not prohibit or penalize users from making disparaging remarks against US Bank. Instead, US Bank maintains, the agreement limits users’ conduct in using the digital financial services, not statements or comments about the services themselves.

Banks face significant potential liability if they are found to have violated the “right to gripe” law. Any violator is subject to civil penalties, ranging from $2,500 to $5,000 for each violation, and may face additional monetary penalties if the violation is willful, intentional, or reckless. Cal. Civ. Code § 1670.8(c), (d). When a class comprises all similarly situated residents of California, the penalties can quickly add up to significant liability.

California is not the only state with a right-to-gripe law. Maryland has a similar state law prohibiting non-disparagement clauses in consumer contracts. See Md. Code Ann., Com. Law § 14-1325. And these right-to-gripe laws may become more prevalent across the country. For example, legislation proposed in Utah would prohibit consumer review restrictions in consumer contracts. See Consumer Review Fairness Amendments, H.B. 63 (Utah 2024). The actions against BOA and US Bank testing the California law may provide useful guidance regarding the bounds of acceptable provisions in banking services agreements.