The Federal Trade Commission (FTC), which enforces federal consumer protection and antitrust laws with the goal of promoting competition while protecting consumers from fraud, deception, and unfair business practices, has enforcement or administrative responsibility over dozens of laws, including the Consumer Review Fairness Act (CRFA). The CRFA is designed to protect consumers’ ability to share their honest opinions about a business or its goods/services, and it thus prohibits form contract terms that disallow or penalize consumers from freely posting negative reviews, including on social media. This week, the FTC announced that it issued complaints and proposed settlements against two rental home companies that had included illegal non-disparagement provisions in their form customer contracts. Like with its other recent CRFA enforcement actions, the FTC will require future compliance as well as notification to the customers who were subject to the prohibited terms.
As summarized by the FTC, it is illegal for a company to prohibit or punish customers from leaving negative reviews or to give up their intellectual property rights in their reviews but it is lawful for that same company to prohibit or remove a review that:
- contains confidential or private information – for example, a person’s financial, medical, or personnel file information or a company’s trade secrets;
- is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic;
- is unrelated to the company’s products or services; or
- is clearly false or misleading.
If a company violates the CRFA, it can be subject to fines and/or court orders. The FTC’s advice? “The wisest policy: Let people speak honestly about your products and their experience with your company.”
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