Online reviews can be bad for business and devastating to a company's reputation, but they can also cause serious problems for the people who write them.

An Ontario couple learned that the hard way when a $3-million defamation lawsuit was filed against them — for posting negative online reviews — by Ontario-based contractor Design-Spec Building Group.

The civil claim was eventually withdrawn by Design-Spec, which won a $100,000 settlement from the couple for breach of contract.

Jeff and Rosanna Varey are still nervous talking about the case.

Been wronged? Contact Rosa and the Go Public team

"I'm concerned I might end up in court again and I don't want to do that because I just went through a year and a half of hell," Jeff Varey said from his home in the Toronto area.

Go Public found Canada lags behind other countries in implementing protection for those who post online reviews and the businesses that are the focus of those posts. As a result, Canadians are being threatened with legal action while businesses are left with little recourse when targeted by unfair or inaccurate reviews.

As many as 2,000 new reviews of home renovation and repair professionals in Canada are posted on the website HomeStars.com each week. (homestars.com)

The Vareys posted their reviews on the popular website HomeStars. It publishes homeowner opinions about home improvement companies.

The founder of the website, Nancy Peterson, says she was shocked when she heard about the lawsuit and surprised "somebody would go to that extreme, to sue a homeowner for a review of bad workmanship."

Nancy Peterson, founder of HomeStars.com, says 'there's more to be lost than gained' when businesses try to stop clients from posting negative reviews online. (CBC)

She says she's seen a few cases end up in small claims court, but never a lawsuit as big as the one the Vareys faced.

I think consumers have the right to their opinion. - Nancy Peterson, founder of HomeStars review site

"I have a real concern with it. I think consumers have the right to their opinion and if they feel that there was poor workmanship, they weren't happy, they should be able to publish their opinion."

Pricey settlement

Most of the other reviews on the HomeStars website for Design-Spec are excellent.

According to court documents obtained by CBC News, the company alleged in the defamation suit "it has suffered and continues to suffer a loss of reputation as a direct and/or indirect result" of the couple's reviews.

The reviews included the comments "Design-Spec has unprofessional staff" and "Design-Spec did not take ownership or responsibility for its mistakes."

HomeStars.com removed the Vareys' negative review of Design-Spec Building Group at the couple's request after they found out they were being sued by the renovation company. (homestars.com)

In the end, the two sides came to an agreement. The couple agreed to pay more than $100,000 in the breach of contract case for failing to pay for supplies and labour the company provided. In exchange, the contractor dropped the $3-million defamation suit. Nothing was proven in court.

Go Public contacted Design-Spec for comment but the owner declined, citing a nondisclosure agreement.

Dumped by doctor over review

Ottawa resident Jessica Trask contacted Go Public after being dumped by her doctor in a very public way after posting her views on RateMDs.com.

Jessica Trask's doctor dumped her online after she posted a negative review about him on RateMDs.com. (CBC)

She says she posted a review when the doctor cancelled an appointment after she had already arrived in his office.

"I was having these health issues for multiple months, nothing was being resolved. He seemed to be taking no interest," she says.

The doctor responded directly on the review website, informing her he was dropping her as a patient.

Trask says she only discovered she no longer had a doctor when she called his office weeks later to make another appointment after having tests done.

"I was very upset. [Reviews are] something people use regularly. I just wanted to get my experience with him out there," Trask says.

The doctor's other reviews on the rateMDs website are all four or five star, a nearly perfect score.

No rules for dealing with reviews

There are rules on how doctors should end a physician-patient relationship.

The College of Physicians and Surgeons of Ontario's rules include making a "good-faith effort" to determine if a patient would rather stay on and "provide every patient with written notification that the relationship has been discontinued."

There are also guidelines on appropriate use of social media by physicians, but nothing specifically addressing online reviews.

Ontario doctors are obliged to follow rules on how to end a physician-patient relationship, but there are no professional guidelines dealing with online reviews by patients. (RateMDs.com)

In both the Trask and the Varey cases, anonymous reviews provided no protection.

'I wasn't going to be silenced'

Heather Hamilton from Richmond Hill, Ont., had a different experience with online reviews.

She contacted Go Public after an appliance repair company tried to stop her from writing one.

I wasn't going to be silenced. - Heather Hamilton, online reviewer

"I wasn't going to be silenced," Hamilton says. "I thought it was, you know, just bad business."

She says she complained to the company's head office after a repairman charged her $280 for a service call and wanted another $600 to fix a problem with her dryer.

Hamilton showed Go Public a waiver from the company, Appliance Repair Guys, that says she could get a $35 refund only if she signed away her right to write about her negative experience online.

Heather Hamilton refused to sign the gag order an appliance repair company demanded in exchange for a $35 refund on a $280 service call. (CBC)

Hamilton, who is a blogger and active on social media, refused. "I think it's disgusting. We live in a world where this is what we have as consumers. We have our voices.

"And if we don't have that, and people get away with it, that's why they have online reviews, that's why we write blog reviews, that's why we go to social media," she said.

This waiver from Appliance Repair Guys offers a refund only if the customer agrees not to talk publicly about their negative experience with the company. (Supplied by Heather Hamilton)

Appliance Repair Guys didn't respond to Go Public's requests for comment. The company's other online reviews are mostly negative.

No protection for consumers

Late last year, the U.S. passed a federal law that aims to protect online review writers called The Consumer Review Fairness Act.

"This piece of legislation prevents businesses from launching the types of suits where an honest and fair online review is given even if it's negative," U.S. lawyer Sarah Robertson, who specializes in online content, tells Go Public.

Sarah Robertson, a U.S. lawyer, says American law protects online review writers. Canada has no similar law. (CBC)

There is no law like it in Canada. Ontario has the Protection of Public Participation Act that's designed to weed out lawsuits brought for the purpose of suppressing free speech.

But according to lawyer Sue Gratton, that's just part of the problem. She says provinces also need to update defamation laws to protect both businesses and people who write online reviews.

Ontario Lawyer Sue Gratton says it's a challenge to balance the protection of businesses while avoiding 'libel chill' for those who post online reviews. (CBC)

"There were complaints about it being out of date a century ago," said Gratton, who is heading up a project by the Law Commission of Ontario called Defamation Law in the Internet Age.

"On the reputation side, negative online reviews can be devastating to reputation ... internet speech is instantaneous, it has global reach, it can be easily forwarded or hyperlinked, it can be anonymous and it is certainly very difficult to get rid of," she said.

"On the other hand, there is a public interested in having online reviews in the marketplace. And the concern is for libel chill, where the threat of lawsuit may prevent a consumer from speaking their mind."

The goal is to recommend provincial legislative changes that would address the issues. Gratton says she hopes other provinces move to address the issue soon.