The Law and Business of Social Media
June 29, 2015 - Terms of Use, Online Reviews

The Right to Give One-Star Reviews

The Right to Give One-Star Reviews

Congress has taken a step toward protecting consumers’ rights to post negative reviews on websites like Ripoff Report or Yelp with the introduction, by Representative Darrell E. Issa of California, of the Consumer Review Freedom Act of 2015 (the CFRA).

The CFRA follows a California law, enacted in 2014, which made it illegal for businesses to penalize their customers for posting negative reviews of their products or services online. The California law, AB 2365, was passed in response to a growing number of incidents where businesses have used non-disparagement clauses buried in form contracts to charge fines of several hundred to several thousand dollars. Such incidents have occurred all over the country—from a New York hotel withholding $500 from a couple’s security deposit after a member of the couple’s wedding party posted a negative review, to a Michigan-based Internet retailer charging two of its customers in Utah $3,500 after they published a review criticizing the retailer’s customer service.

AB 2365 sought to put a stop to such incidents by prohibiting businesses from including in any contract for the sale or lease of consumer goods or services any provision that requires the consumer to waive his or her right “to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.” The statute also makes it unlawful to enforce such a provision “or to otherwise penalize a consumer for making any statement protected under” the law. This is presumably intended to address situations in which a business does not explicitly prohibit negative reviews, but instead seeks to impose a penalty on a consumer who posts a negative review, as in the Michigan case noted above.

The CFRA is intended to take the California policy and expand it nationwide. Similarly to AB 2365, the CFRA prohibits businesses from including in any form contract a provision that prohibits or restricts a person from, or imposes a penalty or fee against a person for, engaging in a “written, verbal, or pictorial review, performance assessment of, or other similar analysis of, the products, services, or conduct of a business or person which is a party to the form contract.” The CFRA empowers the Attorney General to bring actions for a civil penalty of up to $16,000 for each day that the business requires the use of the penalizing contract by a distinct person.

The CRFA also closes a potential loophole in AB 2365 that at least one enterprising organization had been encouraging its clients to use. Medical Justice, an organization that provides template form contracts to medical service providers, had included language in those contracts purporting to assign to the service provider the copyright in any review posted by a patient. If effective, this assignment would allow the service provider to issue takedown notices under the Digital Millennium Copyright Act or threaten the publishing websites with infringement actions. AB 2365 did not expressly address such assignment provisions, but the CRFA voids any provision that “transfers … to any person or business any intellectual property rights that the individual may have in any otherwise lawful [communication] about the person or the goods or services provided by the person or business.”

Though it is unclear how likely the CFRA is to become law, it has bipartisan sponsorship and certain key players have publicly voiced their support. For example, Yelp has come out strongly in favor of the CFRA in a post on its official blog. The bill is currently being reviewed by the House Committee on Energy and Commerce and has been referred to a subcommittee.

With a political environment that is increasingly hostile to non-disparagement clauses, businesses will now have to consider different ways of avoiding negative reviews—perhaps by providing better products and services.