Last month, the Federal Trade Commission ("FTC") announced two new actions under the Consumer Review Fairness Act ("CRFA") against companies that allegedly used non-disparagement provisions in consumer "form contracts" in connection with their respective services to rent properties. These two actions follow the FTC's inaugural CRFA actions against three companies last month, which we previously wrote about here.
According to the FTC's complaints, the two companies had contracts with consumers that barred the consumers from posting negative reviews about the property or companies. The agreements also stated that a breach of the provision would result in liquidated damages.
The FTC's proposed consent orders prohibit the companies
from offering a form contract to any consumer that contains a
review-limiting contract term or requires that a customer accept
such terms as a condition of the company complying with the
contract. Furthermore, the orders require the companies to notify
affected consumers that the challenged contract provisions are
void, and that they have the right to post honest reviews online.
Lastly, the proposed orders impose compliance and reporting
requirements on the companies.
Takeaway: The FTC is making CRFA enforcement a priority. Advertisers should take note and ensure that their consumer form contracts do not violate the terms of the CRFA by prohibiting or restricting consumers' rights to post honest reviews, and that they do not impose penalties on consumers for exercising that right.
This article is presented for informational purposes only and is not intended to constitute legal advice.