Releases and non-disclosure agreements (NDAs)
OBSI’s approach to releases and non-disclosure agreements
At OBSI, once an investigation is complete and we make a recommendation to compensate a consumer, a final settlement is reached between the consumer and firm. When this happens, firms often require a release and/or non-disclosure agreement. Below we explain the nature of releases and non-disclosure agreements – what they are, how they work and why they are and how they relate to our process for resolving consumer complaints.
What is a release or non-disclosure agreement (NDA)?
Releases and NDAs are legal agreements that firms usually ask for when they settle a claim against them.
Releases and non-disclosure agreements are technically two separate things and can be presented individually, but they are often combined into one agreement when a complaint is settled. A release is a promise from the consumer not to pursue any further legal claims about the subject matter of the release.
An NDA documents the consumer’s agreement not to disclose information about the settlement, and in some cases, about the circumstances of their complaint to others. Releases and NDAs are commonly used in settlements of all kinds, including lawsuits.
Why do releases and NDAs get used?
Participating firms often use releases and NDAs following OBSI’s dispute resolution process. This practice provides a legal framework that protects the firm in exchange for the payment of compensation in a settlement. The use of releases and NDAs is a common legal practice because they protect sensitive information and can help to preserve the firm’s reputation.
How do releases and NDAs work?
When a consumer has signed a release promising not to pursue any additional claims, a firm can use it as a complete defense against any subsequent claims from the consumer in the future. NDAs can be used in legal and other settings to prevent the consumer from using confidential information or publishing it. In extreme cases, the NDA can be used to get a court injunction or even sue the consumer.
Does OBSI support the use of releases and NDAs?
OBSI accepts that releases and NDAs can be a reasonable and sometimes helpful part of the settlement process. They can be effective with promoting a settlement because they give the firm an incentive to resolve the dispute and the confidence that when they pay the settlement the claim is truly behind them. For these reasons, they are commonly used in settlements during legal proceedings.
Are there any limits to the use of releases and NDAs?
OBSI’s position on releases and NDAs is that they should be reasonable and fair. This means that they should be limited to the facts and issues directly related to the consumer’s claim and not unduly restrictive.
Can OBSI advise consumers on releases and NDAs?
Releases and NDAs are important legal documents that affect the rights and obligations of the person signing them. Advice about whether to sign a release or NDA or make changes to them is legal advice. Because OBSI’s staff cannot provide legal advice to consumers, they will not advise consumers about whether they should sign a release or NDA. If consumers have questions about this, they should contact a legal professional.
What should consumers do when they are asked to sign a release and NDA?
Consumers should read the release and NDA carefully and make sure they understand the promises that it requires from them. If they have concerns or do not want to agree to the terms, they can talk to the firm and ask about the changes they would like to see. If the consumer has doubts or concerns about what the release and NDA mean to them or how it applies, they should seek legal advice before signing.
What can OBSI do?
If a consumer expresses concern to us that a firm has presented them with a release and NDA that is unfair, unreasonable or feels wrong to them, we try to answer their questions about it without providing legal advice.
Additionally, if a consumer raises a concern that the NDA does not accurately describe the claim and we agree, we may contact the firm to discuss our concerns and encourage them to adopt narrower language. In extreme cases, we may report firm conduct that is repeatedly unfair to a regulator.
Have questions?
If you have general questions about our approach to releases and NDAs, feel free to contact us. For advice about how an NDA impacts you or whether you should sign a release or NDA from your firm, you should reach out to a legal professional who can give you legal advice.