In December 2016, the Consumer Review Fairness Act became law. On February 21, 2017, the FTC published guidance for businesses in following the new law. The law protects the consumer’s right to express and share his or her honest review of a company or its products, even if the review is negative. To accomplish this, the law targets contractual provisions used by companies to stifle negative reviews. The law specifically prohibits any such provisions, whether in online terms and conditions or in some other contract.
The law makes it illegal for a company to use a contract provision in a “form contract” that:
- Prohibits or restricts the ability of an individual who is a party to the contract to review the company’s products, services, or conduct;
- Imposes a penalty or a fee against an individual giving a review; or
- Requires individuals to give up their intellectual property rights in the content of their review.
The law provides that any such provisions in a form contract are void, barring some specific exceptions. The law also exposes companies using prohibited contractual provisions to FTC enforcement actions, including potential financial penalties.
To ensure compliance and avoid enforcement actions, the FTC recommends that businesses: (1) “review their form contracts and online terms and conditions; and (2) remove any provision that restricts people from sharing their honest reviews, penalizes those who do, or claims copyright over people’s reviews (even if you’ve never third to enforce it or have no intention of enforcing it.)”
As stated by the FTC: “The wisest policy: Let people speak honestly about your products and their experience with your company.”