Congress Passes Law Preventing “Gagging” of Customer Online Reviews

November 30, 2016

On Monday, November 28, a unanimous Senate sent the Consumer Review Fairness Act of 2016 to the President for signature.  This law forbids companies from inserting “gag clauses” in non-negotiable form contracts.  Businesses, seeking to avoid negative criticism online, have made increasing efforts in recent years to limit consumers’ ability to post negative reviews on the Internet.  Such reviews are a common feature of popular sites such as yelp, Yahoo, and Google.  Businesses had attempted a variety of techniques to limit reviews, including explicit prohibitions against posting reviews, non-disparagement clauses, and contractual terms making the business the owner of any intellectual property in reviews.  The Consumer Review Fairness Act would make all of these techniques illegal in non-negotiable form contracts.

Particularly because non-disparagement clauses may be broadly worded, businesses may need to make sure their form contracts would not be interpreted as violating this law.  Above all, the best defense against negative online reviews is providing good customer service to generate positive reviews.  Even when businesses attempted in the past to enforce provisions limiting the abilities of consumers to make negative comments, in many cases this only resulted in further negative publicity for the business.  This law certainly promotes the free sharing of information and customers’ rights to free expression, but ultimately it may also save businesses from themselves.

The President is expected to sign the law.  Here are links to a copy of the bill and the Senate Commerce Committee’s comments.