Indiana Attorney General Sues Hotel That Charged Guest For Bad Review

In March of 2016, Katrina Arthur and her husband spent one night at the Abbey Inn & Suites in Nashville, Indiana.

She wasn't impressed with the accommodations. Arthur said the room, for which she paid $230, was unkempt and smelled like a sewer. “It looked like it hadn’t been cleaned since the last people stayed there,” she told reporters.

After she checked out, the hotel asked her to leave an online review. She did. But her critique -- which she said reflected her experience -- wasn't acceptable to the hotel.

In early April, the hotel owner sent Arthur a letter demanding that she remove the post. The hotel also charged her $350 for having publicly criticized the inn; she says the hotel took the money directly from her checking account. The Abbey Inn's policies, posted online, included a clause saying the hotel would impose a $350 fee on customers who disparage the establishment.



Several weeks later, Arthur filed a complaint with the state Attorney General. She outlined her criticisms of the hotel, and also said that she unsuccessfully protested the $350 fee to her bank.

Now, Indiana Attorney General Curtis Hill is suing the hotel for allegedly violating a state consumer protection law. The hotel's policy "contained terms that were oppressively one sided and harsh," the Attorney General's complaint alleges.

Hill is seeking an injunction against the hotel and civil penalties, which could come to $5,000 per violation.

The Abbey Inn isn't the first business to face fallout for allegedly trying to squelch bad reviews.

In 2014, online retailer KlearGear was ordered to pay more than $300,000 to John Palmer and Jennifer Kulas, a married couple targeted by KlearGear for posting a bad review of its service. The company had attempted to fine the couple $3,500 for leaving a bad review; when the couple failed to pay, KlearGear reported the couple to at least one credit agency -- effectively destroying their credit.

The couple then sued and were awarded $306,750 -- a figure that includes $204,500 in punitive damages. (KlearGear didn't appear in court in that case.)

KlearGear's decision to target the Palmer-Kulas couple spurred lawmakers in California to prohibit companies from insisting on contractual terms that restrict people's right to post reviews. The measure specifies that anyone who tries to enforce a non-disparagement clause could face penalties of between $2,500 and $10,000.

Last year, Congress passed the Consumer Review Fairness Act -- a bill outlawing "gag clauses" signed last December by former President Barack Obama.

That law, which took effect this year, prohibits companies from using form contracts to restrict consumers' ability to post reviews. The measure also prevents companies from shutting down criticism by asserting a copyright interest in reviews -- a technique used by some health care professionals earlier this decade.

Even without the new law, the Federal Trade Commission said non-disparagement clauses could be illegal. In September 2015, the FTC sued the Sarasota, Florida-based Roca Labs, which sells weight-loss products, for allegedly engaging in an unfair practice by attempting to stop consumers from posting bad reviews.

Legalities aside, attempts to squelch reviews can easily backfire in the court of public opinion. The hotel's operator told the Indianapolis Star she received death threats after news of the Attorney General's lawsuit broke last week. "At this point, I don't know if we can keep our doors open," she reportedly said.

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