Negative Reviews, Unfair Competition, and Deceptive Trade Practices in Construction
You invested the time, money, and grit needed to build a successful construction business. You have the right insurance coverage, thoughtfully written contracts, and solid vendor relationships. Nothing stands in the way of your success, or so you thought. Unfortunately, contractors are vulnerable to attacks from sources that have nothing to do with mechanic’s liens or building codes. These attacks cut to the heart of your business… and they feel personal.
“My contractor was terrible. He failed to communicate about scheduling changes and his work was sloppy.”
Reviews like this can hurt your future business prospects, while the person writing the review often doesn’t face consequences… even if they are wrong. False statements that tend to harm your reputation in the community are quickly labeled “defamation” while emotions run high, but a legal claim for defamation doesn’t arise from a statement of pure opinion. Websites like Yelp or Nextdoor collect reviews from the community, so they are generally understood to be a collection of opinions.
Sometimes reviews mischaracterize the facts. If the contractor in the example above told the customer about some scheduling changes but neglected to tell the customer about all changes, the statement that the contractor “failed to communicate about scheduling changes” is an interpretation of the truth and probably wouldn’t amount to defamation.
The best defense to negative reviews is a good offense. Do what you can to make things right, then focus your efforts on securing rave reviews from other customers. One complaint in the midst of 50 positive reports won’t carry much weight.
Construction is a highly competitive industry. Customers vet multiple companies before choosing their contractor, and your stand-out employees may catch the eye of your competitors. But what happens when your star project manager leaves with your customers or proprietary business information?
Employees can prepare to compete with you while they still work for you, but they have a duty of loyalty to your company, so they can’t begin competing until after they are gone. If they solicit customers while working for you, they competed unfairly.
Employees inevitably bring their knowledge and experience when they leave, even if they learned everything they know from you. However, they can’t take confidential information that brings unique value to your company and isn’t accessible to the general public (also known as “trade secrets”). This doesn’t include customer lists, which are usually not considered trade secrets, but it can include unique processes or products you’ve developed as long as you’ve made serious efforts to protect them from unauthorized disclosure. Written confidentiality policies and password protections are a good start.
Deceptive trade practices
If you’ve ever purchased supplies from a vendor only to learn that what you received was not what you paid for, you may have fallen victim to a deceptive trade practice. The construction industry is vulnerable to these practices because where competition is fierce, someone is always willing to cut corners to fast-track their own success. Other examples of deceptive practices impacting contractors include:
- A competitor uses a name so similar to yours, customers are likely to believe they are dealing with you;
- A former employee starts a competing company and uses photographs of your work as representations of their own; and
- A “contractor” claims to be licensed, insured, or bonded when they are not.
If your company falls victim to a deceptive trade practice, act quickly to stop the damage. Contact the Minnesota Attorney General or an attorney right away.
If you have questions or would like assistance with any of the topics discussed in this article, please reach out to Heidi Bassett. Heidi litigates cases involving unfair competition, deceptive trade practices, and other business-related disputes. Heidi is an experienced trial attorney who is adept at balancing her clients’ legal needs with their financial realities.