The Consumer Review Fairness Act of 2016

Every day it seems more consumers rely on and create online reviews for products and services businesses offer. Individuals might search for reviews on sites such as Yelp or TripAdvisor or through Google before they buy a product or book a service. Some might solicit recommendations from their friend networks on social media sites like Facebook and Twitter to find a reliable mechanic, plumber, doctor, or specialty store near them.

While online reviews have the potential benefit consumers and businesses alike, negative online reviews also can severely hurt businesses and merchants. A single negative review might get lost in a sea of positive reviews on a national retailer’s review page. But a small or local business might not have the volume of positive reviews needed to balance out a vocal negative review.

Not all reviews are honest opinions about actual experiences with a business, either. An individual may have a personal grudge with an owner or employee and lash out online. Some individuals make a habit of posting negative reviews and then demanding money for removing it. Sometimes people make mistakes and leave a negative review for a business with a similar name to the one they visited.

Some businesses, aware of the increasing presence and power (for better or worse) of online reviews, actively participate in the reviews. Some view reviews as a discussion and respond to praise and criticism alike to appear more responsive and attentive to their consumer base and bolster their reputation and credibility. Others actively encourage customers to leave positive reviews if the customers were satisfied with the goods or services they purchased and to bring concerns to the business first before posting a negative review.

However, some businesses try not just to encourage positive reviews, but also to prohibit negative reviews through language embedded in consumer contracts. In one example, according to a 2015 complaint brought by the Federal Trade Commission (“FTC”), a Florida-based company offered a discount on services to consumers who agreed in their contract not to make any negative comments about the company. Reportedly, an apartment complex worked a fine into their lease agreements, where tenants agreed that leaving “negative commentary and reviews” online would result in a $10,000.00 fine. The Senate Commerce Committee held a hearing on so-called “gag clauses” in 2015 over concerns gag clauses in non-negotiable form contracts may chill honest speech and unjustly punish consumers for sharing their opinions and ideas.

In December 2016, former President Obama signed into law the Consumer Review Fairness Act of 2016. Both houses of Congress approved the bill before it reached the president.

The Consumer Review Fairness Act (CRFA) was introduced with the goal of “protecting consumers posting honest feedback online” because, according to the bill’s proponent, Congressman Leonard Lance, “consumers should be able to post, comment and tweet their honest and accurate feedback without fear of retribution.” “Too many companies,” he said, “are burying non-disparagement clauses in fine print and going after consumers when they post negative feedback online.”

The CRFA prohibits gag clauses in form contracts and voids them if they prohibit an individual from providing an honest review of the “goods, services, or conduct” of the other parties to the contract. The full text of the bill is available online here.

Many may celebrate the CRFA for offering greater protections to consumers and consumer speech. But the CRFA may cause concern for businesses already struggling with the downsides of online review culture. Businesses are not left without recourse, however.

Both consumers and businesses should know the CRFA does not stop businesses from negotiating non-disparagement clauses in contracts. If a buyer and a seller negotiate an agreement, the buyer can give up the right to post negative reviews through the negotiation process. Sellers cannot bury a pre-emptive gag clause or penalty in fine print at the end of a contract the buyer has no ability to negotiate.

Also under the CRFA, businesses and merchants still maintain their ability to sue consumers whose reviews are defamatory, extortionate, or otherwise dishonest or unlawful.

Businesses faced with a dishonest or unlawful review should consider their response tactics carefully and may benefit from a consultation with an experienced attorney, reputation management company, or public relations firm. And consumers, who benefit from greater protections for their “right to Yelp” may still want to follow some basic tips before seriously considering posting a negative review.

By Alexandra Tracy-Ramirez, HopkinsWay PLLC. | © HopkinsWay PLLC 2017. All rights reserved.

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