The House of Representatives has passed the Consumer Review Fairness Act, a bill that would prohibit businesses from including a provision in consumer contracts restricting the ability to post reviews.
The bill, H.R. 5111, which has the backing of entities like Angie’s List and Yelp, also precludes a company from asserting a copyright interest in a review.
The legislation was spurred by the exponential growth of online reviews and the ways companies have struggled to manage negative commentary. Some businesses tried to foreclose the possibility of bad reviews by including a non-disparagement clause in their terms of service.
In one high profile example, KlearGear made headlines when it elected to act on the provision and sent a bill for $3,500 to a couple after they posted a poor review. The couple refused to pay and filed suit alleging their credit was damaged as a result of the bill. A California federal court judge ordered KlearGear to pay the couple $306,750 as a result.
The federal legislation, which is modeled on a similar law passed in California in 2014, authorizes the Federal Trade Commission to bring enforcement actions and does not preempt state law. Exceptions are included for defamation, libel and slander, as well as agreements where the parties had a “meaningful opportunity” to negotiate the terms.
To read the Consumer Review Fairness Act, click here.
Why it matters: In December 2015, the Senate unanimously passed a similar bill—the Consumer Review Freedom Act. Because of minor differences in the proposed legislation, the Senate must consider and pass H.R. 5111 before the measure can be sent to President Barack Obama for a signature.