The U.S. Federal Trade Commission (FTC) has issued two administrative complaints and proposed settlements enforcing the U.S. federal Consumer Review Fairness Act (CRFA), against two companies that had included “non-disparagement” clauses in their consumer contracts, restricting consumers from posting negative reviews online. The CRFA prohibits non-disparagement provisions in consumer form contracts, which are standardized terms used in selling or leasing goods or services, and that are imposed on an individual without a meaningful opportunity for the individual to negotiate the contracts’ terms.
The proposed settlements ban the companies from prohibiting, restricting or penalizing consumer reviews from consumers to the companies, require the companies to proactively notify affected consumers that the challenged contract provisions are void and that they have the right to post honest reviews online. For one of the companies, the settlement also requires it to dismiss with prejudice a pending lawsuit alleging that a consumer violated its non-disparagement agreement.
The FTC also reached a settlement with a background screening company over allegations it falsely claimed to be a participant in the EU-U.S., Privacy Shield program. The Privacy Shield program establishes processes to allow companies to transfer consumer data from European Union countries to the United States in compliance with EU law. The FTC found that while the company initiated a Privacy Shield application, it never completed the steps necessary to be certified as complying with the framework.
The FTC also sent warning letters to 13 companies that falsely claimed they continue to participate in the U.S.-EU Safe Harbor and the U.S.-Swiss Safe Harbor frameworks, which became defunct in 2016 after being invalidated and replaced with the Privacy Shield program. The FTC also sent warning letters to two companies for claiming in their privacy policies that they are participants in the Asia-Pacific Economic Cooperation (APEC) Cross-Border Privacy Rules (CBPR) system even though they are not certified participants.
CLICK HERE to read the FTC’s enforcement action relating to the U.S. federal Consumer Review Fairness Act. CLICK HERE to read the FTC’s enforcement action relating to compliance with privacy programs.
This article was published in the Internet, Cyber and Copyright Group’s June 2019 Newsletter.