The Consumer Review Fairness Act (the “Act”) became effective in March 2017 and has significant implications for most companies offering consumer products or services, especially for those with interactive websites. The Act limits what companies can include in their standard contracts, including the terms and conditions of some websites. Beginning on December 14, 2017, the Federal Trade Commission (the “FTC”) and state attorneys general will treat the use of contracts violating the Act as an unfair and deceptive trade practice, making it subject to potential financial penalties or other enforcement.
What Does the Act Do?
The definitions included in the Act are fairly technical, but in short, the Act protects consumer reviews of products and services when a purchase is made under a non-negotiated form contract. To accomplish this, the Act prohibits the use of “form contracts” lacking meaningful negotiation and containing terms that (i) prohibit or restrict reviews of the seller’s products/services, (ii) impose a penalty or fee for such reviews, or (iii) transfer certain intellectual property rights in reviews. The Act also voids the provisions of any “form contracts” that do any of the foregoing. However, the contracts can still prohibit the posting of certain content, such as trade secrets, confidential information, certain personal information, offensive language, and computer viruses, to name a few.
What Does the Act Apply to?
The Act applies to all “form contracts” used in the course of a sale to consumers that cannot reasonably be negotiated. The Act never defines “goods and services,” so the Act has no real limitation on what type of seller it applies to. It would seem to include websites that provide an interactive service for which they charge a fee as well as traditional sellers and service providers. The Act also neglects to specify exactly what situations fall within the Act’s reach. It could include only contracts for sale, or it could also include terms of use for a website that advertises products or services. While this is unclear from the Act itself, it would be safer to assume maximum applicability until we see how the Act is actually enforced.
Does the Act Prohibit Deletion of Social Media Posts or Other Reviews?
The Act never actually states that it is unlawful to remove reviews, but rather that it is unlawful to have “form contracts” restricting reviews in the manner described. However, the FTC states on its website that the Act applies to social media (at www.ftc.gov/tips-advice/business-center/guidance/consumer-review-fairness-act-what-businesses-need-know). The terms described in the Act do clearly seem to include posts on social media accounts. Still, because there is no blanket restriction in the Act from removing reviews, the Act seems only to prevent companies from including terms in their “form contracts” that limit social media posts (or any other reviews described in the Act). None of this seems to limit a company’s ability to actually delete social media posts, so long as none of the company’s “form contracts” restrict or prohibit covered communications. However, it should be noted that the FTC may attempt to enforce this Act broadly, and courts have not yet had significant opportunity to interpret its reach.
Important Notes:
- The Act covers any oral, written, or pictorial review, whether electronic or not. This includes more than just online reviews, although online reviews are likely to be the main area the Act will be applied.
- The limitation against “prohibiting or restricting” reviews could apply broadly. Terms of use reserving a broad ability to remove or censor posts could violate the act, even if they do not specifically impose a penalty or restriction.
- “Form contracts” can still transfer some intellectual property rights in reviews, so long as they meet the requirements of the Act.
- The Act does not limit a business from bringing claims of defamation, libel, or slander over a review.
How Do I Comply with the Act?
- Website terms of use and policies for sites that allow any type of reviews or customer comments should be reviewed and revised for compliance with the Act, even if the website does not have an e-commerce component.
- All contracts with consumers that are (for all practical purposes) non-negotiable should be reviewed and revised for compliance with the Act. This includes most electronic contracts, such as e-commerce contracts, and paper contracts that are standard forms, such as pre-printed contracts used in over-the-counter sales or rentals.
- Although it seems unclear at this point whether deleting negative social media posts could bring on an FTC enforcement action, the best practice would be to not delete any negative posts or reviews made by customers unless they are clearly false, misleading, or meet one of the other specifically permissible reasons. Although the Act does not specifically prohibit this, the FTC may view it as within the scope of the Act and may pursue such activity. Even if you are ultimately successful in defending a challenge, that could be a costly and embarrassing fight.
- To ensure best practices, you may consider developing an internal policy that meets these standards.
Contact us for more information on the Act or to get specific advice on how to comply. — Collin Atkins