Monday, December 19, 2016

You Cant Tell Your Customers to 'Shut Up' Anymore :: Consumer Review Fairness Act Signed into Law

Bad idea: Set up a business and provide poor goods or services; receive bad reviews online for your poor goods or services.

Worse idea: Instead of treating your customers' feedback as free expert advice and listening to their suggestions on how to improve your business, sue your customers - experience the Streisand Effect - resulting in increased media coverage highlighting your lousy goods, service, and treatment of customers.  Ensure that negatives reviews of your business get the widest exposure possible.

Worser Idea:  Attempt to solve this problem by telling your customers to shut-up. Insert a gag-clause in your terms of service so that it is a breach of contract for your customers to provide negative reviews of your service.

Jennifer Kulas Palmer testified before Congress about her negative experience with online business KlearGear.com.  According to Palmer, in 2008 her husband ordered about $20 worth of Christmas gifts from KlearGear.  When it did not arrive, they attempted to reach out to the company, but to no avail.  Like so many consumers who have had a bad experience, they wrote a negative online review.  Three years later, Palmer heard from KlearGear, claiming that Palmer had violated their Terms of Sale and that Palmer owed KlearGear $3500. Attorneys from Public Citizen represented the Palmers and filed a successful lawsuit against KlearGear. See Chris Morran, “KlearGear.com Ordered To Pay $306K To Couple Who Wrote Negative Review,” Consumerist, June 26, 2014; KlearGear must pay $306,750 to couple that left negative review Lawyer: CYRUS FARIVAR - 6/25/2014 Ars Technica; Jon Brodkin, It will soon be illegal to punish customers who criticize businesses online Ars Technica 11/29/2016.

If there was any doubt that this type of thing is a bad idea, in this year of divided and partisan politics, Congress unanimously voted to end attempts to silence customer reviews. The Consumer Review Fairness Act was signed into law by President Obama on December 14th.

According to the new law, 'form contracts' (those terms of service or standard forms shoved in front of customers to sign without ability to negotiate individual terms) are void if they prohibit customer reviews.  Any such gag provisions are unlawful and are subject to enforcement by the Federal Trade Commission or the states. The Federal Trade Commission will be publishing best practices on how to comply with the Consumer Review Fairness Act.

All of this comes about in the context of the Good Samaritan provisions of the Communications Decency Act, 47 USC 230(c), which says that an online services are not liable for the third party content.  This means that Yelp, TripAdvisor, Amazon, Google, and all the other review sites can encourage people to provide reviews of goods and services - without those online services becoming liable for those reviews. 47 USC 230(c) legally set the foundation for the interactive web where many third parties contribute without the host becoming liable for every utterance.

The Consumer Review Fairness Act establishes that you cannot tell consumers to shut up - it does not, however, protect consumers from liability for what they say.  Businesses can, for example, still seek redress for defamatory reviews. Consumers can review but they may still be held responsible for their words.   



Sen. Thune's Statement During Senate Hearing
"Zero Stars: How Gagging Honest Reviews Harms Consumers and the Economy."


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