Late last year, Congress passed the Consumer Review Protection Act, a law designed to stop businesses from using contracts to prevent customers from posting honest reviews about the business. The Act came about because companies often add provisions in their contracts, including in their online terms and conditions, that threaten to sue consumers, or penalize them financially, for posting negative reviews or complaints. At a time when consumers may rely more on Yelp reviews than those of professional critics, the Act's protection of ordinary customers, no matter how difficult, is important.
Recently, the Federal Trade Commission ("FTC") published the Consumer Review Fairness Act: What Businesses Need to Know (the "Guidance"), which reminds businesses about the new Act and the risk of non-compliance. Here are some highlights:
Businesses may no longer include in a contract for the sale/lease of goods/services - other than employment/independent contractor contracts - any language that:
- restricts the ability of a consumer to review the company's products, services or conduct;
- imposes a penalty or fee against a reviewer; or
- requires consumers to give up intellectual property rights in their reviews.
While this is a huge win for average consumers, it does not entirely insulate them — and companies still have recourse against negative consumer reviews. For example, under the Act, a company can still prohibit or remove a review that:
- contains confidential or private information;
- is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity or other intrinsic characteristics;
- is unrelated to the company's products or services; or
- is clearly false or misleading.
So what does this mean for your company? As the Guidance states, "the wisest policy [is] let[ting] people speak honestly about your products and their experience with your company." In light of the new FTC Guidelines, we encourage readers to review their form contracts, point of sale language, and online terms and conditions, and consider revising any provisions that restrict consumers' ability to freely share their honest opinions.
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