Congress Inches Closer To Outlawing “Gag Clauses” That Block Customers From Writing Negative Reviews

The House of Representatives will soon get to vote on a bill that would make it illegal for a company to use so-called “non-disparagement” or “gag” clauses in their contracts and user agreements to prevent customers from writing or saying anything negative about that company.

The Consumer Review Fairness Act was introduced earlier this spring by Rep. Leonard Lance (NJ) and Rep. Joe Kennedy (MA, of course). If signed into law, it would give the Federal Trade Commission and state attorneys general the authority to take enforcement action against businesses that attempt to use these ethically questionable clauses to quiet consumers.

A nearly identical piece of legislation — the Consumer Review Freedom Act — unanimously passed through the Senate in late 2015. The only difference between the two bills at this stage — aside from the name — is an amendment added today that appears to simply clarify the FTC’s authority.

The House Energy and Commerce Committee voted unanimously this afternoon to move the Fairness Act to the House floor for consideration. Given its bipartisan support and the lack of any push-back from business lobbying groups, it would be a surprise if the House failed to pass the legislation.

“This issue is about protecting consumers posting honest feedback online,” says Rep. Lance in a statement. “Online reviews and ratings are critical in the 21st Century and consumers should be able to post, comment and tweet their honest and accurate feedback without fear of retribution.”

The most notable non-disparagement case — and the one that brought the issue to the forefront — involved the failed attempt by online retailer KlearGear to hit a customer with a $3,500 penalty after she wrote a truthful but negative review of the company online.

Unfortunately, that’s not a one-off case. We’ve also told you the dubious use of non-disparagement clauses by sketchy cellphone accessory sellers, wedding contractors, landlords, and makers of weight-loss products.

“Too many companies are burying non-disparagement clauses in fine print and going after consumers when they post negative feedback online,” said Rep. Lance.

In 2014, California banned the use of gag clauses against people in that state, but previous attempts at legislating the issue on a national level had fallen short until the latest efforts by both the Senate and House.

“In 2016 online platforms are where consumers turn to praise or criticize their shopping, eating or traveling experiences,” concludes Lance. “They should be able to do so without harassment from companies eager to protect an image.”

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