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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 tseligman@fkks.com, Hannah Taylor at (212) 705 4849 or htaylor@fkks.com, or any other member of the Frankfurt Kurnit Advertising, Marketing & Public Relations Group.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
