Are Disparagement Clauses Legal?

Apparently, there seems to be a growing trend across the US where businesses are including “disparaging clauses” in their form contracts.  From Massachusetts to Las Vegas, business are including language stifling honest and negative reviews of such businesses by threatening to sue the customers who may post negative reviews.  

According to the Federal Trade Commission (FTC), “‘ [m]any online shoppers use customer reviews and ratings to get information, but these companies used gag clauses in their form contracts to stop customers from posting honest but negative feedback… [t]hese gag clauses are illegal, and companies that know it but use them anyway will be subject to civil penalties.’”

The Consumer Review Fairness Act (CRFA)  “‘…defines such contracts as those with standardized terms that are used in selling or leasing goods or services, and which are imposed on an individual without a meaningful opportunity for the individual to negotiate the contracts’ standardized terms.”  Recent FTC enforcement under the CRFA led to orders requiring “…companies to notify, via mail or email, customers with whom they entered into form contracts containing allegedly illegal non-disparagement clauses… that the non-disparagement provisions are void and cannot be enforced, and that those customers can publish their honest reviews, even if their comments are negative.’”

Honest, transparent reviews leads to trust. Reviews should be considered as part of any company’s marketing campaigns as well. Unfortunately, lately there seems to be an overwhelming amount of cases where companies are paying for potentially misleading positive reviews or stifling honest negative reviews, which lead to potential consumer lack of trust of brands that participate in such schemes.  #substantiationequalstrust #transparencyformstrust #advertisingandmarketinglawyer #hispanicadvertisingandmarketingattorney 

For more information: https://www.ftc.gov/news-events/press-releases/2019/05/ftc-announces-first-actions-exclusively-enforcing-consumer-review