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Your Clients Can Now Trash You Online… And You Cannot Contractually Stop Them

New law called the Consumer Review Fairness Act of 2016 enacted in the waning days of the Obama Administration prevents integrators from including a non-disparagement clause in their contract, specifically protecting consumers’ right to post negative reviews. Law takes effect March 14, 2017.

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Integrators can no longer include a non-disparagement clause in their contract. A new law that calls for the removal of a non-disparagement clause from form contracts was recently enacted and signed into law by the Obama Administration and will take effect on March 14, 2017.The “Consumer Review Fairness Act of 2016,” H.R. 5111, makes certain clauses of a form contract void if it prohibits, or restricts, an individual from engaging in a review of a seller's goods, services, or conduct. 

According to legal expert Ken Kirschenbaum of Kirschenbaum & Kirschenbaum and regular columnist for CE Pro's sister publication Security Sales & Integration, the new legislation puts an end to fine print clauses in contracts that prohibit customers from posting negative reviews, and furthermore takes away the right of businesses to sue for damages if the customer disobeys.

Specifically, the Act voids any provision in a form contract (like a website’s terms of use) that (1) restricts a party’s ability to leave reviews, (2) imposes penalties for leaving negative reviews, or (3) transfers intellectual property rights in reviews or feedback content to the other party in the contract.

According to Kirschenbaum, the Act applies to “form contracts,” as opposed to those that have been meaningfully negotiated, and it does not cover contracts between employers and their employees and independent contractors. Nor does it protect consumers from civil actions for breach of confidentiality, defamation, slander or libel. Moreover, the Act does not prohibit a party from removing reviews from their own site that are defamatory, obscene, explicit, harassing, false, or misleading or reviews that are unrelated to the goods or services offered by the business.

“The purpose of H.R. 5111, the Consumer Review Fairness Act  of 2016, is to prohibit the use of certain non-disparagement clauses in form contracts that restrict the ability of a consumer to publicly review the goods or services offered in interstate commerce that were the subject of the contract. H.R. 5111 would invalidate such clauses subject to this legislation in form contracts and prohibit a person from offering a contract containing a non-disparagement clause, where a consumer has no meaningful opportunity to negotiate the terms. A violation of the legislation would be treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under the Federal Trade Commission Act (FTC Act, 15 U.S.C. 41 et seq.). Such violations are punishable by civil penalties,” he says. 

The Consumer Review Fairness Act of 2016 should prevent businesses and individuals from imposing non-disparagement clauses restricting truthful reviews in cases where consumers have no meaningful opportunity to bargain over the terms of a form contract. The goal of H.R. 5111 is to preserve the credibility and value of online consumer reviews by prohibiting non-disparagement clauses restricting negative, yet truthful, reviews of products and services by consumers. 

About the Author

Jason Knott
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Jason Knott:

Jason Knott is Chief Content Officer for Emerald Expositions Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California.

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KirschenbaumLegal
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