California Civil Code § 1748.50 went into effect on January 1, 2025.  The complete statute reads: “Any provision in a contract or agreement that prohibits a consumer from publishing or making statements about the business as a condition of receiving a partial or complete refund or any other consideration or thing of value is contrary to public policy and shall be void and unenforceable.”

Since the statute has only been in effect for a few months, there are no published court decisions or secondary sources that interpret this law or limit its application.  In the interim, it would be prudent for California businesses to remove conditions in customer contracts that disincentivize or punish the customer from publishing negative reviews.

A reasonable interpretation of this statute also bars businesses from including confidentiality and non-disparagement clauses in settlement agreements with customers.

While the statute expressly applies to businesses, it does not provide a definition as to what types of entities or activities qualify as a “business,” creating ambiguity as to whether this new law applies to certain entities. Nor does the law define or explain what is involved in “making a statement about the business.”  These ambiguities are likely to result in litigation and case law that clarifies the breath of this statute.