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The Consumer Review Fairness Act: What You Need to Know

by | Feb 20, 2017 | Ratings and Reviews, User Generated Content | 0 comments

Genuine ratings and reviews have always played a crucial role in shaping up positive mindsets, and thus, purchase decisions of customers. As 84% of people trust online reviews as much as a personal recommendation, it’s not puzzling to see the fear of negative reviews, which dwells in every marketer’s heart. But in an attempt to curtail the spread of negative reviews, some companies have gone the extra mile…so much so that they didn’t realize that they are violating the right of free speech. That’s currently being addressed, though, by the new Consumer Review Fairness Act.

To put the history plainly, in an effort to keep their online reviews monotonously positive, some companies began to add “gag orders” or “non-disparagement” clauses in their contracts or terms of service agreements to silence dejected customers by punishing them if they leave negative online reviews or say bad things about them through social media channels. What was even shocking was that most of these consumers never even knew they agreed to such a policy. Many companies used to put such gag orders in the footer of a website or some vague place where you wouldn’t think to look. Naturally, almost every time, they went unnoticed and many customers became subject to a lawsuit or other fines. Some customers were even fined for just threatening to leave a bad review online. Though the list of such examples is too long, the following ones are just the templates-

  • A pet sitter sued a couple in Plano, TX, because they left a negative online Yelp review about the pet sitter’s pricing policy and how their fish bowl was cloudy (i.e., the fish were overfed) when they returned from their trip.

  • One apartment complex put a clause in their lease agreement stating that any photographs of the apartments are the property of the apartment management company and that renters would be fined/sued if they left negative reviews about the apartments online.

  • A Florida wedding vendor had a clause in their agreement that makes couples agree that they will never make or encourage any disparaging comments about their company in any form, verbal or written.

Yelp even started to post warnings on a business’s Yelp listing when they’re aware that the business owner could bring a lawsuit or fine a person if they leave a negative review about their business.

consumer alert reviews

The Consumer Review Fairness Act:

This injustice caught the attention of New Jersey Congressman Leonard Lance, Vice Chair of the Commerce, Manufacturing and Trade Subcommittee. To protect the consumer’s basic right to post honest feedback online, on December 2, 2016, he and US House Speaker Paul Ryan signed Lance’s Consumer Review Fairness Act.

With unanimous bipartisan support, this consumer protection legislation passed both the US House and Senate. On December 15, 2016, the then president Obama signed the Consumer Review Fairness Act into law. You can view its snippet here. According to the Congressman’s Press Release:

“In the 21st century economy, it is easier than ever for consumers to make informed choices on which business or service to use by consulting websites and apps that publish crowdsourced reviews of local businesses and restaurants. Consumer reviews are a powerful informational tool because consumers place a high value on the truthful reviews of other consumers. Some businesses have become frustrated by online criticism and some have employed a questionable legal remedy known as a “non-disparagement” clause to retaliate against consumers. These [clauses] are often buried in fine print. The Consumer Review Fairness Act would void any non-disparagement clauses in consumer contracts. It also would ensure companies are still able to remove false and defamatory reviews.”

Read on below for more about the Consumer Review Fairness Act…

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The Future Impact Of The Consumer Review Fairness Act:

The Consumer Review Fairness Act voids any conditions in a form contract (like a website’s terms of use) that (1) restrict a party’s ability to leave reviews, (2) impose penalties for leaving negative reviews, or (3) transfer intellectual property rights in reviews or feedback content to the other party in the contract. The last provision is quite significant, as it disables businesses to take out any unwanted reviews without a court order by sending a takedown notice under the Digital Millennium Copyright Act.

Apart from online reviews, the Consumer Review Fairness Act also takes care of photographs, videos, and offline reviews. Besides, after the enactment of this Act, state attorneys general and the Federal Trade Commission (FTC) will be empowered to enforce the new law when required, but it cannot displace state law.

Even though this is a move that demands to be welcomed by everyone who cares about the consumer rights and the US Constitution, some concerns have already begun to erupt. The Consumer Review Fairness Act is applicable in the premise of form contracts. It will not affect the acts that take place after a substantive negotiation, and it does not cover contracts between employers and their employees and independent contractors.

Moreover, under the Consumer Review Fairness Act, companies can still legally prosecute the authors of false and defamatory online reviews and they are not prohibited from removing such reviews. They simply cannot preempt consumers publicizing their actual opinions by burying non-disparagement clauses in non-negotiated form contracts, but the act doesn’t stop them from putting non-disparagement clauses as they can negotiate to have them in the agreement.

In spite of these limitations, the Consumer Review Fairness Act is an epochal move toward safeguarding the consumers’ right to say freely what they feel about products. The collateral impact will be felt upon the enhanced possibility for customers to make more informed and studious buying decisions.

The unanimous passing of this bill in both the houses suggests that there was an urgency to get rid of ploys that stifle freedom of expression. However, if you’re already transparent with your customers and stand by your products, the Consumer Review Fairness Act won’t make a difference for you. Nevertheless, it will be interesting to see how this law will impact the ratings and reviews policies of certain companies after  March 14, 2017, as it applies to non-disparagement clauses in effect on or after 90 days from its enactment.

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