United States: Get Your Gripe On: The Consumer Review Fairness Act Is Live

Last Updated: August 18 2017
Article by Aaron P. Rubin

Co-authored by Charles Cartagena-Ortiz

Searching "millennials killed..." on the Internet returns over 1.5 million results in .65 seconds. Commentators have blamed the generation raised by tablets, smartphones, and apps for killing everything from marriage to brunch, often deriding today's youth for being too opinionated and too obnoxious. It is a bit ironic, then, that the right to complain was almost a casualty of the technology generation.

Today, ecommerce and social media are ubiquitous and intertwined. For example, any ecommerce site worth its salt will include interactive user comments that enable purchasers to praise or critique products. Moreover, the power of online review sites, such as Yelp and Rotten Tomatoes, to set consumer tastes is only increasing. For example, a study conducted at Harvard Business School concluded that a one-star improvement on Yelp would lead to a roughly 9% increase in revenue for restaurants. Considering how thin profit margins are in the restaurant sector, 9% could make or break a small business.

In response to the growing significance of user reviews, some companies sought to protect their revenue streams by including non-disparagement clauses in form contracts, such as terms of service and other click-through agreements. Retailers, studios, restaurants and even hotels used these gag clauses to suppress bad reviews by levying fines and imposing other penalties on consumers.

In some cases, these practices were abusive. For example, one small town Utah couple told their story to the U.S. Senate Committee on Commerce, Science & Transportation. Jen Palmer left a negative review about a company after a twenty dollar Christmas purchase her husband made never arrived. Three years later, the company sent Ms. Palmer a demand for $3,500 claiming that her review violated the company's terms of sale and use. When the Palmers were unable to pay, the company flagged them to credit agencies, creating a multi-year ordeal for their household. There have also been reports of doctors and dentists requiring their patients to agree to gag clauses in order to receive medical treatment.

Some time ago, we discussed in Socially Aware the possibility of the federal government taking action against such practices and, on December 14, 2016, President Obama signed into law the Consumer Review Fairness Act (CRFA). Now, as of March 14, 2017, the CRFA's provisions prohibiting gag clauses in the context of customer reviews have become effective.

What Activities Are Banned?

The CRFA cracks down on three main activities. Specifically, companies are prohibited from using form contracts to restrict a consumer's ability to leave reviews about goods or services they received, imposing penalties for leaving negative reviews, and requiring assignment by the consumer of intellectual property rights in reviews. Further, the CRFA is not limited to written reviews or the typical five-star rating system employed by many review sites. Even pictures and videos created by consumers fall under the protection of the CRFA.

The fact that the CRFA applies to pictures and videos, combined with the provision prohibiting compulsory assignment of intellectual property rights in reviews, effectively stops companies from using a particularly creative method of censoring reviewers. In written testimony to the state of Maryland, the Electronic Frontier Foundation (EFF) described a method whereby companies would require consumers to agree to assign to the company the copyright in any reviews created by the consumers. Then, if the consumers posted a video of themselves demonstrating or discussing a product to a website (such as YouTube), companies would send a takedown notice under the Digital Millennium Copyright Act (DMCA) to assert ownership of the video and demand that the website remove the video. The EFF called this practice a "disturbing trend" among companies and made reference to one medical organization actually instructing doctors to use the DMCA to restrict negative reviews.

Effectiveness of the CRFA

As noted above, the CRFA's provisions prohibiting gag clauses became effective on March 14, 2017. These provisions apply to consumer contracts in effect on or after that date, meaning that companies are prohibited from enforcing gag clauses in such contracts even if the contracts were entered into previously (though companies are not subject to penalties for having entered into such contracts prior to March 14, 2017). The state attorneys general and the Federal Trade Commission (FTC) have authority to enforce the CRFA, but such enforcement will not begin until December 14, 2017 and will apply only to contracts in effect on or after that date.

Exceptions and Limits

As noted above, the CRFA only applies to form contracts containing boiler plate provisions that consumers are unable to negotiate. This means contracts that are meaningfully negotiated are not covered by the protections of the CRFA. Additionally, the CRFA does not protect would-be reviewers from civil actions where their content includes confidential, sensitive or private information, or constitutes defamation, libel or slander. Nor does the CRFA stop companies from removing posts on their own sites that are defamatory, obscene, explicit, harassing, false, unrelated to the business or misleading. The FTC has cautioned companies that a consumer's pure opinion is not likely to meet the "clearly false or misleading standard." Finally the statute does not apply to employment contracts or agreements between companies and independent contractors.

Penalties

The CRFA does not offer a private cause of action for consumers. As mentioned above, enforcement will not begin for a few more months, but once it does the state attorneys general and the FTC will be charged with enforcing the law. The CRFA states that companies may be subject to investigations, fines and lawsuits but does not identify specific penalties. Rather, it grants the FTC and the states the power to bring civil actions directly against companies that violate the CRFA. Additionally, the FTC is authorized to treat any violation of the CRFA as an unfair or deceptive business practice, as defined in the Federal Tort Claims Act. It should also be noted that the CRFA does not preempt state laws regarding consumer reviews, and such laws may provide consumers with additional remedies. For example, California's "Yelp law" also banned gag clauses in consumer contracts and dates back to January 2015.

Conclusion

In short, while the CRFA does not spell the end of gag-clauses in all circumstances, the statute protects the rights of millennials to cry over spilled mimosa, empowers disgruntled holiday shoppers who didn't get their "Tickle-Me-Sebastian" dolls in time to blast retailers and provides a safe harbor for anyone else who was done wrong by a company or business to "get their gripe on" in a public forum.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Aaron P. Rubin
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.