Consumer Review Fairness Act Taking Effect

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[author: Ava Childers, Law Clerk]

The Consumer Review Fairness Act (CRFA) began to take effect yesterday, March 14, 2017. One aim of the CRFA is to protect consumers’ ability to publicly review services and vendors without being subject to restrictions or fines imposed by form contracts. It does so by voiding provisions within form contracts between consumers and service providers and/or vendors that restrict (or penalize) consumers from publicizing their reviews.

Under the CRFA, a form contract is “a contract with standardized terms (i) used by a person in the course of selling or leasing the person’s goods or services; and (ii) imposed on an individual without a meaningful opportunity for such individual to negotiate the standardized form.”[1]

The law states:

“a provision of a form contract is void from the inception of such contract if such provision: (A) prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication[2]; (B) imposes a penalty or fee against an individual who is a party to the form contract for engaging a covered communication; (C) transfers or requires an individual who is a party to the form contract to transfer to any person any intellectual property rights in review or feedback content, with the exception of a non-exclusive license to use the content, that the individual may have in any otherwise lawful covered communication about such person or the goods or services provided by such person.”[3]

This means that if vendors use standard form contracts which include such provisions and their customers are not afforded a genuine opportunity to negotiate the contracts, these restrictive provisions are void. Furthermore, the law states that “[i]t shall be unlawful for a person to offer a form contract containing a provision described as void” under the CRFA.[4]

This law is meant to protect the free speech of consumers, however it does not provide protection for defamatory or libelous postings, reviews which are violative of other laws, or the disclosure of confidential information. Furthermore, there are exceptions which businesses may avail themselves of.

The Federal Trade Commission and state attorney generals will have the authority to enforce the CRFA, however enforcement will not begin until December 14, 2017 and only apply to contracts in effect on or after that date.

[1]  (15 U.S.C.A § 45b (a)(3(A)).

[2] “The term ‘covered communication’ means a written, oral, or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party.” (15 U.S.C.A § 45b (a)(2)).

[3] (15 U.S.C.A § 45b (b)(1)(A-C)).

[4] (15 U.S.C.A § 45b (c)).

[View source.]


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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