There are several studies going around that show how important reviews are to a consumer’s decision-making when it comes to making purchases. In order to protect the integrity of online reviews, Congress passed The Consumer Review Fairness Act (CRFA) in 2016. This was largely modeled on an earlier California law.
The intention of CRFA was to “prohibit the use of certain clauses in form contracts that restrict the ability of a consumer to communicate regarding the goods or services offered in interstate commerce that were the subject of the contract, and for other purposes.”
These terms are usually called “non-disparagement” clauses, and are used by periodically by professionals and corporations in order to preempt and prevent negative review. The can often provide financial penalties or the right to sue for their violations, even though they’re illegal.
It seems that there are more than enough businesses that haven’t gotten the memo. Last week, the FTC announced that some administrative complaints were settled with five firms using these illegal clauses in their customer contracts:
- A Waldron HVAC
- National Floors Direct
- LVTR LLC
- Shore to Please Vacations
- Staffordshire Property Management
These complaints were announced back in May and June. It isn’t clear if these contracts have been around for years, which would pre-date the CRFA, or if these companies got bad legal advice.
Now, these firms are going to have to notify consumers who signed their agreements that the contractual provisions in question can’t be enforced. There are other multi-year reporting and compliance requirements that the FTC orders impose as well.
It seems that Shore To Please Vacations had sued a vacation renter who wrote a bad review in a Florida civil court, but that lawsuit has to be dismissed in breach of contract.