Congress bans online store 'gag orders' on customers for bad reviews
Congress passed the so-called Consumer Review Fairness Act on Monday, leaving it up to President Obama to decide the bill’s fate.
Should he sign the act into law, online stores and businesses will be banned from using “gag clauses” to silence consumers who leave critical feedback on products and services.
“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,” Internet Subcommittee Ranking Member Brian Schatz (D-Hawaii), one of the sponsors of the bipartisan law, said.
The Consumer Review Fairness Act would make it illegal for providers to make customers agree to terms that prohibit them from posting negative reviews on goods or services, including on such websites as Yelp or TripAdvisor. The legislation grants rights to any consumer to leave written, oral or pictorial reviews. It will also be illegal to punish those leaving unflattering comments with penalties or fees.
First introduced in 2014, the bill stems from a legal case filed three years ago by a Utah family who had their credit history ruined after an online store charged them $3,500 for a negative review.
John Palmer ordered a desk toy and a keychain from an online store called KlearGear in December 2008. After the purchases, meant as Christmas gifts, did not arrive by February 2009, Palmer’s wife Jennifer Kulas posted a negative review on RipoffReport.com. Prior to that, the family said, they tried to contact the store, but its managers were unavailable.
In 2012, KlearGear contacted the Palmers asking them to either remove the comment or face a fine. The couple ended up being charged $3,500, which they could not pay. The company said they owed the fee for violating a “non-disparagement clause” in KlearGear’s online Terms of Sale and Use, which banned anyone from “taking any action that negatively impacts KlearGear.com, its reputation, products, services, management or employees.”
According to John Palmer, he did not agree to the clause, since the company added it only in 2012, nearly four years after his purchase.
KlearGear lost the legal battle and was forced to pay $306,750 to the family, who claimed they had to live three weeks without heat, because they could not take out a new credit line to replace a broken furnace. They also had to allege debt to restore their credit history.