On May 8, 2019, the Federal Trade Commission (FTC) announced its first three cases that exclusively enforce the Consumer Review Fairness Act (CRFA). Enacted in December 2016 to protect consumers’ ability to share their honest reviews, the CRFA prohibits companies from using form contracts that bar consumers from writing negative reviews or threaten them with legal action if they do.
According to the FTC’s administrative complaints, each of the three companies—an HVAC and electrical contractor, a flooring seller, and a horseback trail riding operator—unlawfully used non-disparagement clauses in customer contracts.
The three proposed consent orders include provisions designed to ensure future CRFA compliance. In addition to barring the companies from using non-disparagement clauses in form contracts for goods and services, the proposed orders require the companies to notify consumers who signed the unlawful contracts that the non-disparagement provisions are not enforceable and that those customers can publish their honest reviews, even if negative.
The FTC will publish a description of the consent agreements in the Federal Register and solicit public comments for thirty days. After reviewing the public comments, the Commission will decide whether to make the proposed consent orders final.