Senate Passes Bill to Protect Consumers and Integrity of Online Reviews
Washington, D.C. – The U.S. Senate today passed by unanimous consent S. 2044, the Consumer Review Freedom Act, introduced by Chairman John Thune (R-S.D.), Communications, Technology, Innovation, and the Internet Subcommittee Ranking Member Brian Schatz (D-Hawaii), and Consumer Protection, Product Safety, Insurance, and Data Security Subcommittee Chairman Jerry Moran (R-Kan.). The bipartisan bill is also co-sponsored by the full committee’s Ranking Member, Senator Bill Nelson (D-Fla.), and Sens. Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Steve Daines (R-Mont.), and Claire McCaskill (D-Mo.).
The Commerce Committee approved the bill on November 18, 2015 and held a hearing on the issue on November 4, 2015, with testimony from Ms. Jen Palmer, a plaintiff in Palmer v. KlearGear, where a company demanded the removal of a negative online review or payment of $3,500 in fines because the online merchant’s terms of service included a non-disparagement clause. When the review was not taken down, the company reported the unpaid $3,500 to a credit reporting agency as an outstanding debt, which negatively impacted the Palmers’ credit.
“This legislation is very simple. A person should be able to give their honest review of a good or service they purchase online without fear of facing a penalty for their opinion,” said Sen. Schatz. “Online reviews help consumers make better choices and that’s why we must end the practice of unfair non-disparagement clauses.”
“I’m pleased to see this legislation unanimously pass the Senate. It would make certain that consumers in Kansas and across the country are able to make their voices heard without having to fear lawsuits or financial repercussions for honest feedback,” said Sen. Moran. “Just as word of mouth is used by family and friends to share experiences with particular brands or businesses, online reviews have significant benefits to consumers in their purchasing decisions.”
Gag clauses now appear in a large number of non-negotiable form contracts. A form contract is when a party leverages its outsized bargaining power to impose standardized terms without a meaningful opportunity for the other party to modify the contract. Some businesses have sought to use these clauses to penalize or pursue fines from customers for negative but honest reviews of their services on websites such as Yelp or TripAdvisor. The Consumer Review Freedom Act bans this practice.