President Signs Consumer Review Fairness Act

President Signs Consumer Review Fairness Act

December 20, 2016

by Jerry Glover

So you purchase an airline ticket on line. During the process, you have to click on something that says you have read and agree to the website’s terms and conditions (you probably don’t read those terms and conditions; I mean who has the time?). Your airline trip turns out to be less that satisfactory—there are no pillows, the coffee is lukewarm, there is no sugar for that coffee, the film you purchased with your credit card doesn’t stream, etc. You are upset. After the trip, you decide to let the world know how awful it was. So you go to a website like Yelp or TripAdvisor and post a negative review of the airline based on that trip.

Little did you know, however, that posting that type of review violates the airline’s website terms and conditions you had earlier agreed to because that document included a non-disparagement clause that prohibits passengers from posting negative or critical reviews of the airline’s performance on web sites. That clause may even impose a monetary fine on you for violating the non-disparagement prohibition. And if you don’t pay the fine, the airline threatens to ruin your credit.

A far-fetched hypothetical? Not at all. Over the past several years, consumers have unwittingly agreed to these types of on-line contracts and have been threatened with legal actions/fines/etc. by a business if the consumer violates that business’ website ban on on-line criticisms. California and Massachusetts had passed state “non-disparagement” laws that prohibited these types of on-line contracts. But there was no national remedy.

Now there is. In an unusual bipartisan effort, Congress passed and, on December 15, President Obama signed into law the Consumer Review Fairness Act of 2016. What does it do? The Act

(1) Covers so-called “covered communications” which means any written, oral or pictorial review, performance assessment of or other similar analysis including by electronic means the goods, services or conduct of a person by an individual who is party to a form contract with that person.

(2) A “form contract’ is one that is used in the course of selling or leasing a person’s goods or services and is imposed on an individual without a “meaningful opportunity for such individual to negotiate the standardized terms.” These “form contracts” would include the terms of use found on most websites. The term “form contract” does not include employer/employee or independent contractor agreements.

(3) Form contracts cannot

a. prohibit or restrict an the right of an individual who is a party to a form contract to post a critical review of the business/service which is also a party to that form contract.

b. Fine or penalize parties to the form contracts for posting critical reviews.

c. Require the individual using the site’s services or purchasing its goods to transfer any intellectual property rights the individual may have in critical postings he/she creates to the web site (except the site may require the individual to provide to the site a non-exclusive license to use the posting). If the web site requires the creator of a critical post to assign all rights (including the copyright) in and to the critical post to the web site being criticized, then the web site would have the right to require the site posting the criticism to take it down as a matter of copyright infringement.

The Act does not affect any civil causes of action for defamation, libel or slander brought by companies being criticized in on-line postings or, under certain circumstances, the right of a web site to refuse to post a critical review.

The Act empowers the Federal Trade Commission to investigate web sites that require users to enter into form contracts that violate the rules set out above as a form of unfair competition.

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