On
December 14, 2016, President Obama signed the Consumer Review Fairness Act of
2016. This Act voids “non-disparagement clauses” in form contracts that are
designed to prevent individuals from posting genuine negative reviews or
comments of goods and services on line. There is a 90-day grace period, so the
Act takes effect on March 14, 2017.
Blanket prohibitions in form contracts
that prevent individuals from leaving genuine negative reviews will violate the
Act, although the Act does not affect a legal duty of confidentiality.
Specifically, the following types of clauses will violate the Act: 1)
prohibitions against or restrictions on an individual’s ability to leave a
genuine negative review; 2) penalties or fees against an individual for leaving
a genuine negative review; and 3) clauses that transfer intellectual property
rights in review or feedback content.
Companies can still bring civil causes
of action for defamation, libel, slander, or any other similar cause of action.
Also, websites are still able to remove, or refuse to publicly display, content
that is harassing, abusive, obscene, vulgar, or otherwise inappropriate.
Finally, the Act does not apply to contracts that have terms the parties were
able to meaningfully negotiate.
The Federal Trade Commission will
enforce the Act in the same way it enforces violations of unfair or deceptive
trade practices. State Attorneys General may also enforce the Act by bringing a
civil action on behalf of residents of the State. Enforcement
will begin on December 14, 2017.
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