The Consumer Review Fairness Act of 2016 (CRFA) effectively voids and prohibits businesses from using form contract provisions that bar consumers from writing or posting negative reviews online, or threatening them with legal action if they do.
CRFA Enforcement
Enforcement of the CRFA is now being stepped up as marked by an August 16, 2019, FTC announcement regarding the first five Commission actions exclusively focused on enforcement of the CRFA and approval of the resulting final settlement orders for five cases.
Non-Disparagement and Confidentiality Clause
The FTC found that an electrical company violated the CRFA by including non-disparagement language in its form contracts and terms requiring consumers to keep the contract confidential and not share it with anyone, including the Better Business Bureau, while subjecting consumers to liquidated damages in the event they violate those terms.
Prohibiting Negative Consumer Reviews on Any Medium
A flooring company was found to have violated the CRFA by including language in its contracts prohibiting consumers from “publically disparaging or defaming” the company “in any way or through any medium” while subjecting consumers to a financial penalty.
Reports to Governmental Agencies
A horseback riding company was found to have violated the CRFA with language that prohibited consumers from reporting the company to Animal Control or any other governmental agency as well as restricting their ability to post negative online reviews, also subject to a financial penalty.
Consumer Reviews Less Than 5-Star
A vacation property rental company was found to have violated the CRFA by contractually prohibiting negative reviews which included any review including a rating less than 5-star or “absolutely best” or that is deemed by a company officer to be negative. The contract included a $25,000 liquidated damages clause.
