Consumers would be endowed with a protected right to post reviews pursuant to a new bill introduced in Congress.
The Consumer Review Freedom Act of 2015—introduced by Reps. Darrell Issa (R-Calif.), Eric Swalwell (D-Calif.), Blake Farenthold (R-Texas), and Brad Sherman, (D-Calif.)—would prohibit businesses from including a provision in consumer contracts restricting the ability to post reviews. Also banned by H.R. 2110: asserting a copyright interest in a review.
Penalties of up to $16,000 per day could be levied against businesses that required consumers to sign a non-disparagement clause. Consumer rights groups and entities like Angie’s List and Yelp backed the legislation, which is modeled on a similar law passed last year in California.
The issue became a hot topic, as the number of online reviews increased and businesses struggled with managing negative commentary. Some companies tried to foreclose the possibility of bad reviews by including a non-disparagement clause in the terms of service.
Last year, one company elected to act on the provision, when KlearGear sent a couple that posted a negative review a bill for $3,500 for allegedly violating the non-disparagement clause in its terms of service. The couple refused to pay and responded with their own lawsuit alleging their credit was damaged as a result. A federal court judge in California ordered KlearGear to pay the couple $306,750.
When the case made headlines and consumers learned about the existence of such clauses, the California legislature sprang into action and passed a bill that bans non-disparagement clauses or similar terms that restrict a consumer’s right to post a review.
The federal proposal tracks California’s measure but also includes a prohibition on copyright claims, a tactic highlighted in a recent case in New York where a dentist included an assignment of a copyright interest in a patient agreement. When the patient posted a negative review of the dentist, he sued for copyright infringement (although a federal court judge tossed the suit).
To read the Consumer Review Freedom Act of 2015, click here.
Why it matters: Companies should take note of the federal legislation and when considering the use of either non-disparagement clauses or assignment of copyright interest with regard to online reviews, they should remember that in addition to the negative publicity from acting on such clauses, courts have been reluctant to actually enforce them.