April 27, 2017
With the growth of social media and online reviewing sites, it is not a surprise that many businesses benefit greatly from online ratings and reviews that are positive, glowing, and render “five stars.” However, even one bad review could be injurious to the reputation of a business, and an extremely negative review could be detrimental. Because their reputations are on the line, many businesses seek to monitor and limit the reviews their customers may post by placing a clause in their form contracts to prohibit consumers from posting negative reviews. Until recently, there was no federal law or restriction on these clauses, even though they impose penalties and fines on customers who post bad reviews, regardless of whether the review is true or not. However, the recent passage of the Consumer Review Fairness Act of 2016 (CRFA) will greatly hinder a business’s ability to monitor and limit reviews after its enactment in March of 2017.
The new law prohibits businesses from including provisions in their form contracts that allow them to impose penalties (either economically or legally) on customers for posting negative reviews. The law protects any review for products, services, or a company’s customer service. The purpose of the new law is to protect the market from false review statistics, as many consumers rely heavily on reviews when making purchasing decisions. Thus, if a business has threatened its customer’s right to post bad reviews, the average consumer is misinformed of the actual quality of that business. In addition to prohibiting a business from restricting a party’s “right to review,” the new law also prohibits provisions in form contracts that require people to give up their intellectual property rights in the content of their reviews. This part of the law prevents businesses from removing bad reviews merely because they are bad.
Although the new law offers consumers a right to review, this right is not unchecked. A business may still remove any review that contains confidential information or is unrelated to the company’s products or services. It also does not prevent a business from removing any review that is libelous, abusive, obscene or vulgar, sexually explicit, or discriminative of a protected class. If this new law requires your business to change its form contract or if you have questions about complying with the law while protecting your business’s reputation, please contact Michelle Sundgaard at 937-223-1130 or firstname.lastname@example.org.