By: Tracy M. Evans, Esq.

TracyEvans-cOnline consumer reviews have become an integral part of the modern consumer’s decision process. Not only do these reviews help consumers with recommendations on where to eat, shop, or visit, these reviews help promote good business practices and encourage businesses to focus on providing the best customer experience attainable.

It may come as a surprise to learn that until recently, consumers leaving a negative review could be fined or potentially face a lawsuit over their negative comments and opinions. As reliance on consumer reviews began to increase, some businesses started including “non-disparagement clauses” or “gag clauses” in their terms of use. These clauses prohibit consumers from sharing any negative opinions about a business’s goods, services, or conduct, and are often buried on the business’s website, or located in some other fine-print that the average consumer is unlikely to read.

Several businesses utilizing these clauses actually began pursuing consumers who left negative reviews about their experiences. Cases that made the news ranged from a pet-sitter in Texas seeking $1 million in damages against a client who left a negative review stating the sitter had over-fed the client’s fish, to a wedding venue in New York attempting to fine couples $500 for every guest who left a negative review.

In December, President Obama signed into law the Consumer Review Fairness Act of 2016 (the “Act”), seeking to protect a consumer’s right to leave a negative review without the threat of a lawsuit. The Act voids any provision in a form contract, like a website’s terms of use, that (1) restricts a party from leaving reviews, (2) imposes penalties for leaving reviews, or (3) transfers intellectual property rights in reviews or feedback to the other party in the contract. The Act does not preempt state law, so any laws that states may have in place against non-disparagement clauses (California, for example) remain fully enforceable. In states that do not have any laws protecting consumer reviews (Florida, for example), the Act empowers state attorneys general and the Federal Trade Commission to enforce the Act.

The Act is limited in some ways. It only applies to form contracts, and not to contracts with terms that have been meaningfully negotiated. The Act also leaves a business’s right to sue for defamation, slander, or libel fully intact. Further, the Act does not prohibit a business from removing reviews from its own website that are defamatory, obscene, explicit, harassing, false, misleading or unrelated to the goods or services offered or provided.

The Act is scheduled to take effect on March 14, 2017, and will apply to any non-disparagement clause in effect on or after that date. Despite its limitations, the Act represents a significant step towards protecting consumer reviews and allowing the public unfiltered access to useful and accurate information to assist in consumer decisions.

 

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