Online Defamation and the Consumer Review Fairness Act of 2016

It is true that online reviews posted by alleged customers have the potential to aid consumers and businesses alike. However, negative online reviews can hurt businesses and merchants. A single negative review might be relegated to the last page in a group of positive reviews on a national retailer’s review page. But a vocal, negative review might destroy a local or small business that lacks the equalizing volume of positive reviews.

While we rely on the honesty of reviewers, unfortunately, many reviews are dishonest and not real opinions about actual experiences with a restaurant or retailer. A reviewer might take write a nasty and less than favorable review as a result of a vendetta they have with an unsuspecting business owner or employee. Some people engage in extortive behaviors by writing and posting false negative reviews. These posters then demand money to have the reviews removed. HopkinsWay lawyers have talked to people who have mistakenly left a negative review for a business they never patronized because it had a name similar to a business they actually visited.

There are some businesses that try to prohibit negative reviews through language placed in consumer contracts. For example, a Florida-based company offered a discount on services to customers who agreed contractually 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.

President Obama signed the Consumer Review Fairness Act of 2016 (CFRA) into law. Both houses of Congress approved the bill before it reached the president. The (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.”

If a person is prohibited from providing an honest review of the “goods, services, or conduct” of the other parties to the contract, the CRFA prohibits gag clauses in form contracts and voids them. Some people may celebrate the CRFA for offering greater protections to consumers and consumer speech. But the CRFA causes great concern for businesses struggling with the nightmare of online review culture and those who seek to harm businesses with false reviews.

Businesses and consumers must know that the CRFA does not preclude businesses from negotiating non-disparagement clauses in contracts. The buyer can relinquish the right to post negative reviews through the negotiation process if a buyer and a seller negotiate an agreement. If a buyer lacks the ability to negotiate, sellers must not bury at the end of the contract or in fine print a penalty or pre-emptive gag clause. Businesses and merchants maintain their ability to sue consumers whose reviews are defamatory, extortionate, or otherwise dishonest or unlawful, under the CFRA.