26 May 2015

Consumer Review Freedom Act, Making Non-disparagement Clauses in Consumer Contracts Unenforceable

The "YELP Bill" makes it illegal for businesses to penalize customers for writing negative online reviews--

Four members of the U.S. House of Representatives have introduced legislation that would render non-disparagement clauses in consumer contracts unenforceable. The bill, the Consumer Review Freedom Act, comes after geek toy company KlearGear.com tried to charge a Utah couple a US$3,500 fee for a negative review they wrote. 

U.S. Representatives Eric Swalwell (D-CA), Darrell Issa (R-CA), Brad Sherman (D-CA), and Blake Farenthold (R-TX) introduced on April 29, 2015, the Consumer Review Freedom Act to make it illegal for businesses to penalize customers who write negative reviews on Yelp or other online review sites. The bill was motivated by several examples of companies attempting to dissuade people from writing honest reviews by slipping non-disparagement clauses in their consumer contracts. Swalwell introduced a similar bill in 2014.

“Consumers shouldn’t have to worry about being punished for posting an honest review,” said Swalwell. “This is commonsense bipartisan legislation to ensure the rights of consumers are protected and businesses are prevented from silencing fair criticism. I thank Congressmen Issa, Sherman, and Farenthold for joining me to re-introduce this bill and safeguard free speech.”

“The Internet is a critical economic engine, increasingly used for all types of commerce and communication, including for consumer reviews. Some organizations have sought to stifle customers’ abilities to express their opinions online by threatening punitive action if a customer leaves a negative review,” said Issa. “The mere threat of monetary penalties or fines for writing honest reviews would chill the free exchange of opinions we expect to find on the Internet. The Consumer Review Freedom Act would put a stop to these outrageous attempts to silence free speech online.”

“As a country that prides itself on free speech as a tenet of our constitution, I felt this sneaky tactic of limiting it was purely wrong,” said Sherman. “We think this represents a very effective piece of legislation that will allow consumers the freedom to continue doing what they thought they could all along – offer up opinions on products and services consumed to enable the marketplace to make more informed decisions.”

“The modern information economy is driven by an open and robust public dialogue. Unfortunately, some bad actors are trying to undermine free speech by threatening to sue folks who voice their honest opinions in reviews,” said Farenthold. “We cannot allow this attack on our First Amendment rights to continue for the sake of both our liberty and the continued expansion of information-driven businesses on the Internet. I applaud Congressman Issa and Congressman Swalwell for standing up for free speech and am pleased to join them as an original cosponsor of the Consumer Review Freedom Act.”

This legislation would declare such non-disparagement clauses in consumer contracts unenforceable, in addition to providing authority to the Department of Justice and state attorneys general to take action against businesses that include them. California Governor Jerry Brown signed into law a bill making non-disparagement clauses illegal in the state last year.

Jen and John Palmer, a couple from Utah, were fined $3,500 by KlearGear for violation of a non-disparagement clause after they posted a negative review online about their experience with the company. When they refused to pay the company in turn reported their debt to the credit bureaus, which damaged their credit rating.

The bill is supported by Public Participation Project, Yelp, TripAdvisor, National Consumer Law Center (on behalf of its low-income clients), Consumer Federation of America, Angie’s List, and Public Citizen. Original cosponsors also include Reps. Anna Eshoo (D-CA) and Steve Cohen (D-TN).

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