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March 8th, 2017
The Truth Will Set You Free: The FTC Provides New Guidance on Consumer Reviews
Late last year, Congress passed the Consumer Review Protection Act, a law designed to stop businesses from using contracts to prevent customers from posting honest reviews about the business. The Act came about because companies often add provisions in their contracts, including in their online terms and conditions, that threaten to sue consumers, or penalize them financially, for posting negative reviews or complaints. At a time when consumers may rely more on Yelp reviews than those of professional critics, the Act's protection of ordinary customers, no matter how difficult, is important.
Recently, the Federal Trade Commission ("FTC") published the Consumer Review Fairness Act: What Businesses Need to Know (the "Guidance"), which reminds businesses about the new Act and the risk of non-compliance. Here are some highlights:
Businesses may no longer include in a contract for the sale/lease of goods/services - other than employment/independent contractor contracts - any language that:
- restricts the ability of a consumer to review the company's products, services or conduct;
- imposes a penalty or fee against a reviewer; or
- requires consumers to give up intellectual property rights in their reviews.
While this is a huge win for average consumers, it does not entirely insulate them — and companies still have recourse against negative consumer reviews. For example, under the Act, a company can still prohibit or remove a review that:
- contains confidential or private information;
- is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity or other intrinsic characteristics;
- is unrelated to the company's products or services; or
- is clearly false or misleading.
So what does this mean for your company? As the Guidance states, "the wisest policy [is] let[ting] people speak honestly about your products and their experience with your company." In light of the new FTC Guidelines, we encourage readers to review their form contracts, point of sale language, and online terms and conditions, and consider revising any provisions that restrict consumers' ability to freely share their honest opinions.
If you have any questions about the Consumer Review Protection Act, or about any other advertising law issues, please contact Terri Seligman at (212) 826 5580 or email@example.com, Hannah Taylor at (212) 705 4849 or firstname.lastname@example.org, or any other member of the Frankfurt Kurnit Advertising, Marketing & Public Relations Group.
Other Advertising Law Alerts
New Low-Budget Waiver is Now Available for Digital Commercial Productions
Advertisers and agencies that are signatories to the SAG-AFTRA Commercials Contract can now take advantage of a new waiver issued by SAG-AFTRA and the Joint Policy Committee on Broadcast Talent Union Relations when producing low-budget digital commercials.
November 10 2017
FTC Updates Endorsement Guide FAQs and Settles First-Ever Action Against Individual “Influencers”
Recent developments demonstrate the FTC's continued interest in social media endorsements.
September 11 2017
FTC Announces Reforms to Its Investigative Process
Recently, the FTC announced a set of internal reforms intended to improve the process by which the Commission investigates unfair, deceptive and fraudulent business practices. The reforms relate to the Civil Investigative Demands ("CID") that the FTC's Bureau of Consumer Protection issues to request information from investigation targets.
September 7 2017