Can a business prevent an unreasonable customer from posting a negative (and unfair) online review to Yelp, Facebook, Amazon, or other online platform? For example, a reviewer wrote, “Do Not Camp Anywhere Near Here – You Will Freeze” when posting a one-star TripAdvisor review of the Columbia Ice Field in Canada.* Yes, that’s right – the reviewer was upset that the ice field was too cold. You just can’t please some people…
A client recently asked me to include a non-disparagement clause in his customer agreement. He was concerned that a customer might violate the agreement but threaten to post a negative online review if his company didn’t refund their money or otherwise accede to the customer’s demands. A negative (and false) online review seen by enough potential customers could seriously damage his business. How should I reply?
My gut reaction was to say no. Period, the end. First, it’s not great business to censor your customers. Second, it was likely unenforceable as a practical matter, even if it was legally proper. Third… something tugged at my memory. That something was the Consumer Review Fairness Act of 2016.
On December 14, 2016, President Obama signed into law the Consumer Review Fairness Act of 2016 (“CRFA”). In a rare moment of bipartisanship, a bitterly divided Congress joined together to tackle the issue of negative online reviews. The issue was that businesses had started to use non-disparagement or “gag” provisions to prevent customers from posting negative online reviews, even if those reviews were accurate. These are two examples cited by the House Committee on Energy and Commerce:
- Online retailer KlearGear demanded that a customer remove a negative online review from ripoffreport.com or face a penalty of $3,500 for violating the retailer’s gag clause. After being threatened by a collection agency, the customer sued and was awarded $306,750 in damages.
- Roca Labs sold a dietary supplement with the creative name of “Gastric Bypass NO Surgery” priced at $480 for a three-to-four month supply. The FTC alleged that, “Unfortunately for consumers, Defendants are simply selling common, dietary fibers with exaggerated claims at a grossly inflated cost. Their weight-loss claims lack any scientific basis, and are often flat out false.” Worse, Roca Labs included a “gag” clause barring customers from writing any negative reviews about the product, with a penalty of having to pay the “full price” of $1,580. Essentially, customers would be fined $1,100 for writing negative – even if truthful – reviews about the product.
To guard against such abuses, Congress passed the CRFA. The act addresses terms in a “form contract” (a standardized contract that doesn’t give the customer a meaningful opportunity to negotiate the terms) and prohibits the following:
- Imposing a fee or penalty against a party that writes a negative review
- Requiring a party to assign his or her intellectual property rights in a review back to the seller. Some creative companies used such provisions to obtain an automatic assignment of the copyright for the negative review, and then used the Digital Millennium Copyright Act to demand that social media platforms take down the negative reviews. It was very creative and very sneaky, and the practice is now very illegal.
There are important exceptions. Companies can still remove content from their own websites if such content is irrelevant to the goods or services provided, is harassing/abusive, is clearly false or misleading, or contains the personal information or likeness of another person. Companies can protect their trade secrets and other confidential information, and can put restrictions on the creation of photos or video of their products by the company’s employees or contractors. Perhaps most importantly, the CRFA does not apply to employer-employee or independent contractor contracts, which often include non-disparagement clauses.
Violations of the CRFA are considered deceptive trade practices, and the FTC and state attorneys general therefore have jurisdiction over those who violate the CRFA. Remedies can include restraining orders and heavy fines.
The good news is that the CRFA is a significant step in protecting consumers’ rights to complain – even if that complaint is unreasonable. The bad news is that companies can still find creative ways to “inspire” their customers. Remember Roca Labs? The company is still very much in business, and they promise a “100% money back guarantee” for customers who provide “inspiring” video and photographic testimonials about their weight loss experience – but only if “Don approves you to be a valuable inspiring member.”** So don’t start trusting every review you read just because of the CRFA. If a client asks whether they can ban negative reviews, the answer is a resounding no – but they can still reward customers for posting positive reviews (though appropriate disclosures would be required).
My client appreciated my advice, and I included provisions in the contract which should lead to satisfied customers who don’t feel the need to post negative reviews online. Feel free to call me with any questions. You can now post any (truthful) review that you want about this article. Enjoy, and please be kind…
Josh Waterston, Esq.
Elman Technology Law, P.C.
* TripAdvisor review accessed on June 14, 2017 at https://www.tripadvisor.com/ShowUserReviews-g154918-d3337446-r304539771-Columbia_Ice_Field-Jasper_Jasper_National_Park_Alberta.html#CHECK_RATES_CONT.
** Roca Labs website accessed on June 15, 2017 at https://rocalabs.com/about/how-much-does-roca-labs-cost/cashback/