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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 firstname.lastname@example.org, Hannah Taylor at (212) 705 4849 or email@example.com, or any other member of the Frankfurt Kurnit Advertising, Marketing & Public Relations Group.
Other Advertising Law Alerts
FTC Finds “All Natural” Claim Violated FTC Act
The FTC has issued a Final Order against California Naturel, Inc., a seller and marketer of personal care products, finding that the company's "all natural" claims were false and misleading in violation of the FTC Act.
December 15 2016
FTC Policy Statement Focuses on Homeopathic Health Claims
Last week, the Federal Trade Commission issued its new "Enforcement Policy Statement on Marketing Claims for Over-the-Counter (OTC) Homeopathic Drugs," as well as a staff report on a workshop that the Commission held last year on OTC homeopathic drug advertising.
November 28 2016
Compliance Focus: FTC Begins Study of Consumer Disclosures
How effective are your consumer disclosures? A recent FTC workshop suggests it's a good time to ask. Here's a summary of what happened.
September 26 2016