Indianapolis homebuilder settles lawsuit alleging it restricted negative reviews
(This story was updated to add new information.)
A major Indianapolis homebuilder has settled a lawsuit brought by the state of Indiana alleging that the company threatened fines against any homebuyer who publicly shared negative statements about the company.
Indiana Attorney General Todd Rokita accused Davis Homes of including a "gag clause" in contracts that would impose a $2,000 per day fine on any homebuyer who made "statements to the media, on social media, the internet, or neighbors which portray (Davis) in a negative light," according to court documents.
Davis Homes, an Indianapolis-based builder run by CEO Bradley Davis, says it has built more than 25,000 homes across the state.
The federal Consumer Review Fairness Act of 2016 outlaws contract clauses that suppress criticism of a seller's goods and services. The law also bans penalties for negative comments or reviews.
Davis Homes agreed to the settlement while admitting no wrongdoing and denied the state's allegation that the company violated federal law, according to a Thursday press release from the attorney general's office.
Davis Homes did, however, sign an agreement with the state saying it won't interfere with customers' freedom to share negative reviews. The company will stop including the alleged "gag clause" in new contracts and will not enforce the provision with past homebuyers, under the settlement agreement.
The provision restricting homebuyers from speaking poorly of Davis Homes was included only in some agreements for custom homes, a company spokeswoman said in a statement to IndyStar Thursday. The builder has never charged a homebuyer for the associated $2,000 per day penalty, the statement said.
Davis Homes stopped using the clause altogether early last year, according to the statement.
"Davis Homes seeks to have an open dialogue with clients from the moment we meet through the final inspection and closing," the statement concludes, "and remains open to discussing clients' experiences throughout the homebuilding process."
Any Indiana consumers who signed a contract that contains a similar clause restricting or penalizing negative reviews of a business can file a complaint with the Consumer Protection Division of the Indiana attorney general's office at IndianaConsumer.com or by calling 1-800-382-5516.
Email IndyStar Housing, Growth and Development Reporter Jordan Smith at JTsmith@gannett.com. Follow him on X: @jordantsmith09
This article originally appeared on Indianapolis Star: Indianapolis homebuilder sued by state for 'gag clause' in contracts
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