Congress passed the Consumer Review Fairness Act and sent the bill that permits consumers to post negative reviews to President Barack Obama for a signature.
The Senate passed the measure by unanimous consent after the House voted in favor earlier this year.
In addition to prohibiting companies from using a contract provision to restrict consumers' ability to post critiques, the bill also prevents companies from asserting a copyright interest in the reviews. Both the Federal Trade Commission and state Attorneys General were given enforcement power under the new Act, which mirrors similar legislation enacted in California.
That law was the result of a highly publicized dispute between KlearGear and a married couple who posted a negative review about the online retailer. Claiming the couple violated a non-disparagement clause in its terms of service, KlearGear sent the couple a bill for $3,500. The couple refused to pay and later claimed in a lawsuit that their credit was damaged as a result. A federal court judge ordered KlearGear to pay the couple $306,750 in 2015.
The story made headlines, and as consumers learned about the existence of such clauses—which also triggered litigation involving a pet care company and a dentist who were unhappy about negative reviews—lawmakers sprang into action. "By ending gag clauses, this legislation supports consumer rights and the integrity of critical feedback about products and services sold online," Chairman of the Commerce Committee John Thune (R-S.D.) said in a statement after the bill's passage.
To read the Consumer Review Fairness Act, click here.
Why it matters: With a signature from President Obama likely before he leaves office in January, companies should review their consumer contracts to remove or amend any non-disparagement or copyright ownership clauses.