Ever left a review about a small business on Yelp, Trip Advisor or Angie's List? Ever sign a contract with a business that prohibited you from leaving a negative review?
Most small business owners are really apprehensive about reviews on social media sites like Yelp, Trip Advisor and Angie’s List, and most will tell you how valuable those services are for attracting new customers. However, people can and do leave negative reviews that can damage a company’s reputation. Most business owners will admit that handling these types of comments is a huge challenge. And it’s about to become even more challenging.
The U.S. Senate this week gave unanimous consent to H.R. 5111, the Consumer Review Fairness Act. Having previously passed the House in September, the bill now moves to President Barack Obama’s desk.
When signed into law, it will void out any existing gag orders put into contracts and agreements that are placed on consumers by businesses, and the Federal Trade Commission will be able to take action against businesses that do attempt to use them.
A gag order is a contract provision that prohibits a consumer from sharing their honest opinions about a company or service. Some companies’ contracts state that customers are not allowed to post negative reviews on social media or websites like Yelp, otherwise they can seek damages, and some of them have.
Here are the "legal" provisions of the soon to be new law:
Consumer Review Fairness Act of 2016
(Sec. 2) This bill makes a provision of a form contract void from the inception if it: (1) prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract; (2) imposes penalties or fees against individuals who engage in such communications; or (3) transfers or requires the individual to transfer intellectual property rights in review or feedback content (with the exception of a nonexclusive license to use the content) in any otherwise lawful communications about such person or the goods or services provided by such person.
A "form contract" is a contract with standardized terms: (1) used by a person in the course of selling or leasing the person's goods or services, and (2) imposed on an individual without a meaningful opportunity to negotiate the standardized terms.