A new federal law pertaining to customer reviews means companies may soon need to revise their standard-form contracts or website conditions of use with customers who purchase goods or services. The Consumer Review Fairness Act (the “Act”), whose purpose was summarized in an advisory last month, now prohibits non-disparagement or “gag” clauses, as well as transfer of intellectual property clauses, from standard-form consumer contracts, and gives the FTC and state AGs the authority to enforce. The FTC will begin outreach and education efforts by mid-February, and the prohibition on non-disparagement clauses applies to contracts in effect on or after March 14, 2017.
What you need to know:
- Don’t include in your standard-form contracts for goods and services with customers (such as standard hotel terms or travel or retail web site purchase terms) a prohibition or other restriction on customers writing or publishing a negative or unflattering review of the product or service purchased, your business, or their experience at your establishment. You may not require customers to waive their right to publish a negative review or impose a fine or other penalty, such as future exclusion from your business, for doing so.
- Don’t require customers to give up the rights to their reviews, such as through an exclusive license or transfer of copyright ownership. This is also prohibited by the Act, to combat the practice of some companies to require the removal of negative reviews from web sites by sending takedown notices under the Digital Millennium Copyright Act (17 U.S.C. § 512(c)). If you allow customers to post reviews on your website, you’ll need a license, but taking a non-exclusive license is specifically carved out as permissible under the Act.
- Any business that gets reviewed on a third-party platform such as Yelp or TripAdvisor – especially restaurants, event venues, and hotels – should review its customer contracts for these terms and make any necessary changes prior to the enforcement date. Travel, retail, and other web sites with online terms that govern customer purchases and allow customers to write reviews should also review and revise their website conditions of use and their review terms, if separate, as necessary.
- The Act specifically prohibits certain types of contractual provisions, but, consistent with Section 230 of the Communications Decency Act (47 U.S.C. § 230), it doesn’t impose obligations to publish or restrictions on removal. Generally, if you host your own reviews platform, you may continue to use discretion about publishing customer reviews. For example, you may take steps to ensure that published customer reviews relate to the product or service purchased, are true, and don’t contain any illegal or infringing content.
You can read a summary of the Act here.