From: PAA Bulletin No.12
The Federal Trade Commission (FTC) issued the first complaints enforcing the Consumer Review Fairness Act of 2016 (CRFA) in May. The CRFA protects consumers’ ability to share their honest opinions about a business’ products, services, or conduct, in any forum, including social media.
The CRFA was passed in response to reports that some businesses try to prevent people from giving honest reviews about products or services they received. Some companies put contract provisions in place, including in their online terms and conditions, that allowed them to sue or penalize consumers for posting negative reviews.
According to the CRFA, it illegal for a company to use a contract provision that: bars or restricts the ability of a person who is a party to that contract to review a company’s products, services, or conduct; imposes a penalty or fee against someone who gives a review; or requires people to give up their intellectual property rights in the content of their reviews.
The CRFA makes it illegal for companies to include standardized provisions that threaten or penalize people for posting honest reviews. For example, in an online transaction, it would be illegal for a company to include a provision in its terms and conditions that prohibits or punishes negative reviews by customers. (The law does not apply to employment contracts or agreements with independent contractors, however.)
The law says it is permissible to prohibit or remove a review that: contains confidential or private information – for example, a person’s financial, medical, or personnel file information or a company’s trade secrets; is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic;
is unrelated to the company’s products or services; or is clearly false or misleading.
Congress gave enforcement authority to the FTC and the state Attorneys General. The FTC states that it is “unlikely that a consumer’s assessment or opinion with which you disagree meets the “clearly false or misleading” standard.”
Penalties For Violating The Consumer Review Fairness Act
The law specifies that a violation of the CRFA will be treated the same as violating an FTC rule defining an unfair or deceptive act or practice. This means that your dealership could be subject to financial penalties, as well as a federal court order. To make sure your company is complying with the Consumer Review Fairness Act:
- Review your form contracts, including online terms and conditions; and
- Remove any provision that restricts people from sharing their honest reviews, penalizes those who do, or claims copyright over peoples’ reviews (even if you’ve never tried to enforce it or have no intention of enforcing it).
Source: Pennsylvania Automotive Association