Class Action Claims Vanguard’s Terms of Use Infringe on Consumers’ Free Speech Rights

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A proposed class action alleges the Vanguard Group has violated California law by including in its terms of use a provision that prohibits website visitors from posting negative statements about the company and its services.

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The 11-page lawsuit claims the investment management company, in order to promote a positive public image, has attempted to “silence” its customers by imposing unlawful terms of use, to which consumers purportedly agree simply by using Investor.Vanguard.com.

Specifically, Vanguard, which provides a variety of financial products and advisory services, forces users to agree not to make “derogatory” statements that “personally attack[]” the company, or use any of its brand names in a way that “disparages or discredits Vanguard,” the suit contends. According to the case, the defendant also warns that consumers who fail to comply will have their “rights … herein terminate[d] immediately upon any violation … of these Terms of Use.”

The complaint charges that Vanguard’s “chilling” conduct plainly violates California law, which bars companies from including in any contract or proposed contract a provision that waives a consumer’s right to make any statement regarding a business or its employees, products or services.

Simply put, the provision in Vanguard’s terms aims to protect the company’s “self-promoting” public image at the expense of consumers’ right to free speech, the filing stresses.

The case points out that the applicable state law was enacted to combat such conduct and safeguard the individual’s right to “voice their opinions, observations, and experiences” about the products and services available to California consumers.

The lawsuit looks to represent any California residents who visited, used or completed transactions on Investor.Vanguard.com.

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