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New Law Protects Online Reviewers

By William Niehoff, shareholder and Melissa Meirink, associate

A new federal law may cause more problems for businesses attempting to deal with unfair negative online reviews. Business owners already face a number of hurdles in addressing or removing fake or unfair online consumer reviews. The Consumer Review Fairness Act of 2016, which was signed into law by President Obama in December, makes certain terms of form contracts void if the terms prohibit or restrict a consumer from engaging in a review of a business’s goods, services, or conduct.

Non-disparagement clauses, or “gag clauses,” often appear in form contracts and in website terms of use as an attempt by businesses to restrict negative consumer reviews. These clauses are often overlooked by consumers, and have also been difficult for businesses to legally enforce. Now, businesses are prohibited from using gag clauses or they will be faced with potential civil action and penalties from the Federal Trade Commission.

There are exceptions to the restrictions, including employer-employee contracts and individually negotiated agreements. Businesses also maintain the right to pursue a civil cause of action based on libelous consumer reviews or public slander, and can remove certain negative reviews from their own websites. Other exceptions include protection against dissemination of trade secrets, medical information, law enforcement records, unlawful content, and content containing computer viruses.

The Consumer Review Fairness Act is considered a victory for the First Amendment free speech rights of consumers. However, businesses should be aware of the new law and review their present form contracts and terms of use. As of March 14, 2017, the non-disparagement clauses present in existing contracts will be void, and it will be unlawful for businesses to include the clauses in contracts thereafter.

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