On March 14, 2017, the Consumer Review Fairness Act of 2016 (the “Fairness Act”) will come into effect, 90 days after it was signed into law by President Obama. The Fairness Act voids any provision in a form contract between a consumer and a business that (1) restricts the consumer’s ability to leave reviews, (2) imposes penalties for leaving negative reviews or (3) transfers intellectual property rights in reviews or feedback content from the consumer to the business. The Fairness Act was passed in response to an increase in the use of so-called “non-disparagement clauses” that prohibited consumers from sharing their honest opinions about a seller’s goods, services or conduct.
The FTC recently issued guidance on the Fairness Act, including steps businesses can take to protect themselves from inappropriate or irrelevant customer reviews. As described in the FTC’s guidance, the Fairness Act contains provisions that allow companies to protect themselves from inappropriate or irrelevant consumer content, including content that:
- contains confidential or private information (i.e., a person’s financial, medical or personnel file information or a company’s trade secrets);
- 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.
The Fairness Act applies only to “form contracts” – it does not apply to negotiated contracts – and it does not cover contracts between employers and their employees and independent contractors.
The Fairness Act gives enforcement authority to the FTC and the state Attorney General, and companies that violate the Fairness Act can be subject to financial penalties. To ensure compliance, companies should review their consumer contracts for non-disparagement clauses. In addition, companies should remain vigilant for conduct that may fall within one of the law’s exceptions.