House Passes Consumer Review Fairness Act

By Eric Goldman

Posted on September 16, 2016


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Last night [September 12, 2106], the House passed the Consumer Review Fairness Act. The Senate passed the nearly identical Consumer Review Freedom Act back in December. I’ll discuss in a moment the minor variations between the two. Because of these differences, the Senate must approve the House bill, after which it would go to the president for signature. I don’t believe Pres. Obama has taken a position on the bill but I can’t imagine he wouldn’t sign it. Given that both houses approved the law by consent without any opposition and the bills’ differences are not significant, I remain optimistic the law will be enacted this year.

 

What the Law Says

 

As you know, the bills seek to stop businesses from banning consumer reviews about them. The law voids any effort in a form contract to ban consumer reviews, impose fines for writing consumer reviews, or take the IP rights to consumer reviews. It also makes such contract efforts unlawful and authorizes the FTC to bring enforcement actions (and, in some cases, state AGs). The federal law does not preempt state law, so California’s existing law against consumer review bans would remain in effect.

 

I used GovTrack to generate a redline between the House and Senate bills. In addition to a few minor formatting/style changes, the House bill adds the following section (h):

 

Savings provision: Nothing in this section shall be construed to limit, impair, or supersede the operation of the Federal Trade Commission Act or any other provision of Federal law.

 

This provision means that in any conflict with other federal law, this law gets trumped. I’m not sure what consequences this provision has. Perhaps crafty businesses will be able to find support for abusive anti-review practices in some other corner of federal law, but I doubt it. Furthermore, given that the law primarily regulates contracts–which are predominately a creature of state law–I don’t see a lot of risk that the savings clause undermines the rest of the bill. So I view the addition of the savings clause as mostly non-substantive, and certainly it’s no reason for the Senate to hesitate ratifying the House version.

 

More Evidence We Need The Law

 

Probably the #1 question I’ve gotten about the law is whether we even need it. Some folks feel like consumer review bans are an antiquated business practice; others think the courts will shut down any enforcement efforts anyway. I disagree with both assessments. Clearly the practice isn’t antiquated; if anything, we’re seeing more businesses trying to control consumer reviews. And while most courts will get it right, there’s no guarantee. See Galland v. Johnston.

 

Surprisingly to me, we’re still seeing businesses trying to enforce anti-review contract provisions. The most recent ruling involved Prestigious Pets in Dallas, which sued a customer over a negative Yelp review and lost a Texas anti-SLAPP motion. Unfortunately, the court’s opinion provided little insight, so we still didn’t get good citable precedent for future cases. Rather than waiting around for that, the Consumer Review Freedom/Fairness Act would immediately and decisively stop further enforcement efforts.

 

For more on the Prestigious Pets case, see Paul Levy’s blog post and the Dallas Morning News coverage. For more on the Consumer Review Fairness Act, see the Consumerist.

 

Bibliography

   

 

The preceding is republished on TAP with permission by its author, Professor Eric Goldman, Professor of Law and Co-Director of the Santa Clara High Tech Law Institute at Santa Clara University. “House Passes Consumer Review Fairness Act” was originally published September 13, 2016 in the Technology & Marketing Law Blog.

 


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