Consumer Review Fairness Act: Summary and Impact On Small Businesses

graphic of hand choosing rating to accompany post about consumer review fairness actPoliticians gavel’d H.R. 5111, the Consumer Review Fairness Act (CRFA), into federal law.

What does ratification mean for small businesses? Well, as a whole, not much, because the law only affects folks who use “gag clauses” to prevent defamatory reviews.

The Consumer Review Fairness Act = No More “Gag Clauses”

What the law doesn’t say is this: “It’s perfectly legal to post defamatory online reviews.”

Instead, the statute invalidates contract provisions transferring copyright ownership of online reviews.

What do intellectual property rights have to do with online review defamation?

Well, over the past several years, to mitigate the impact of inaccurate, business-crushing rants, some businesses used contracts with online review parameters.

Here’s a hypothetical example of how it typically worked:

Dentist Amy performs patient Todd’s root canal. Before the procedure, Amy makes Todd sign an agreement — which is standard practice. Amy’s contract, however, also includes an intellectual property clause. You see, Amy’s agreement confers copyright ownership, of any future online reviews about her dental practice, from Todd to Amy. So, let’s say, in a fit of expected discomfort the day after the procedure, Todd posts lies about Amy’s work, despite her having done a perfect job. On account of the agreement, Amy could, theoretically, have proven herself “owner” of the comment and gotten it removed.

But the Consumer Review Fairness Act changes all that. Amy’s (hypothetical) contract — and countless others out there just like it — are no longer valid because the CFRA renders “certain clauses of a form contract void if it prohibits, or restricts, an individual from engaging in a review of a seller’s goods, services, or conduct.”

Reactions to the Consumer Review Protection Act

In praise of the new law, Hawaiian Senator Brian Shatz said:

“Reviews on where to shop, eat, or stay on websites like Yelp or TripAdvisor help consumers make informed choices about where to spend their money. Every consumer has the right to share their honest experiences and opinions of any business without the fear of legal retaliation, and the passage of our bill brings us one step closer to protecting that right.”

Yelp also seems pleased with the Consumer Review Fairness Act. Laurent Crenshaw, the company’s Director of Public Policy, enthused:

“While these clauses aren’t everywhere, when people hear about them, it does create a chilling effect and that’s something we’ve been concerned about and were very glad that Congress has taken steps to eliminate.”

You Can Still Sue Over Defamatory Online Reviews

The Consumer Review Fairness Act doesn’t prohibit small business owners from suing over genuinely defamatory reviews. Comments featuring false statements of fact, which materially harm businesses, may still be actionable. So, if you’re the victim of a libelous review, don’t throw your hands in the air and give up. You may be able to remedy the situation, legally.

Speak with a consumer review defamation attorney to discuss your situation and explore solutions.

Article Sources

114th Congress – CRFA

U.S. Senate Cmte. Announcement of CFRA

Contact An Attorney Who Handles Review Issues »