Authors: Attorney John C. Mitby & Attorney Elizabeth L. Spencer

Phone: 608-575-4077 & 608-257-5535

Email: jmitby@hbslawfirm.com & espencer@hbslawfirm.com

Consumer reviews on social media and online have become a vital part of almost all industries. From minor decisions such as searching for a product on Amazon to significant decisions such as hiring an attorney, consumers will first research what they are looking for in hopes of finding the best purveyor of their desired services. Businesses know the importance of these reviews and many have attempted to find ways to manage their image by inserting contract provisions to control or completely ban reviews. However, these provisions often result in a misleading impression of a service provider.

The Law

To combat these contract provisions and ultimately consumer confusion, Congress took action. On March 14, 2017 the Consumer Review Fairness Act of 2016 (CRFA) went into effect retroactively applying to contracts already in existence and to those yet to be formed. In short, the CRFA bans contractual restrictions on consumer reviews by voiding provisions of form contracts that ban:

• Written, oral or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party;
• Contractual provisions that impose penalties or fees against individuals who give reviews about the business whose services they have used;
• Requirement to transfer intellectual property rights in review or feedback content, except if there is a nonexclusive license to use the content.

There is also a moderate list of exceptions to the CRFA which make it okay for a business to remove or prohibit a review. Businesses may:

• Prohibit reviews that violate confidentiality duties imposed by law;
• Prohibit reviews that may result in civil actions for defamation, libel, slander, or similar actions;
• Institute terms and conditions for the creation of photographs or video when it is created by an employee or independent contractor and are only intended to be used by the entity for commercial purposes;
• Remove or refuse to display on their website or webpage anything that contains personal information, the likeness of another, is libelous, harassing, abusive, obscene, vulgar, sexually explicit, inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic; is unrelated to the goods or services offered or available; or is clearly false or misleading.

The Federal Trade Commission (FTC) and the state Attorney General are granted the power to enforce the CRFA. If a business does violate the law the violation is to be treated the same as violating an FTC rule defining an unfair or deceptive act or practice. Thus, the violating party may be subject to all penalties provided in the Federal Trade Commission Act including financial penalties.

Business Effects

First, the CRFA does not completely ban a business from having any control over its image. Businesses may still include provisions in contracts that prohibit defamatory reviews that may invite legal action by a third party, rules that violate legally imposed confidentiality duties such as HIPAA, or personal information.

Second, the CRFA does limit the extent to which a business may control review but is specifically focused on businesses that use contracts with customers to prohibit candid reviews. A business should review any contracts with customers to determine if the terms and conditions may need to be altered to fit within the boundaries and exceptions of the CRFA or need to be completely removed. Particularly look for penalty clauses, claims of ownership or copyright over customer reviews, and clauses that restrict customers from leaving honest reviews.

Finally, before implementing any changes to contracts or prohibiting the posting of a review, business owners should consider consulting with an attorney to confirm that they are correct in their understanding of the law. The CRFA is not just about helping consumers but leveling the playing field by prohibiting business from skewing reviews.