What the Consumer Review Freedom Act Does

The Consumer Review Freedom Act enables any American to write a truthful bad review even if they agreed to a “gag” or “non-disparagement” clause stating that they would not do so.

In a world where negative reviews can literally kill a business, some attorneys and owners came up with a novel way of avoiding them to some extent – the negative review gag clause. The gag clause is a way to threaten a restaurant, hotel, or other business patron if they write a negative review. If the patron writes a bad review they get “fined” or lose their deposit. Does this seem like a violation of free speech? It does to us too. But threatened with the loss of one’s business it’s easy to see how someone desperate to stay in business might take this path.

The Specific Language of the Act

A summary of the Consumer Review Freedom Act states:

” This bill makes a provision of a form contract void from the inception if it: (1) prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract; (2) imposes penalties or fees against individuals who engage in such communications; or (3) transfers or requires the individual to transfer intellectual property rights in review or feedback content (with the exception of a nonexclusive license to use the content) in any otherwise lawful communications about such person or the goods or services provided by such person.”

Similar to the Consumer Review Fairness Act

The Consumer Review Fairness Act, passed by the House, is very similar to the Consumer Review Freedom Act which was passed by the Senate. The bills are almost identical and are expected to be reconciled. Politicians really just need to figure out who gets the credit.

South Dakota Senator John Thune Sponsor

Republican Senator John Thune of South Dakota was the lead sponsor of the Consumer Review Freedom Act (the Senate version) and, not surprisingly, review aggregation sites like Yelp and Tripadvisor whose businesses are based on the free flow of user-generated content support it wholeheartedly.

Gag Clause Not Only Invalid, But Illegal

Not only are review gag clauses invalid, but they are illegal as well. The Act specifically bars anyone from offering contracts that include the clause:

“A person is prohibited from offering form contracts containing a provision that is considered void under this Act.”

Who Would Enforce the Law?

The Federal Trade Commission (FTC) would have authority to enforce the law. The mission of the FTC is the protection of consumers and to eliminate anticompetitive business practices. Once the Act becomes law it is assumed anyone can register a complaint on the FTC site here.

Who Supports the Act?

The Consumer Review Freedom Act is supported by the following organizations:

  • Electronic Frontier Foundation
  • Yelp
  • GlassDoor
  • Fight for the Future
  • Demand Progress
  • TripAdvisor
  • … and more

Does it Address Fake Reviews?

The Act doesn’t address fake reviews, just clauses for real reviews placed in contracts. The law states reviewers ought to disclose their connection to a business, but of course not everyone does, and many reviews are completely fake. This Act is only intended to address clauses in contracts for real reviews.

Is it Law Yet?

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No. The Consumer Review Freedom Act isn’t law yet. It has passed the Senate and is on it’s way to the House. President Obama is expected to sign it into law before he leaves office in January 2017.