House Passes Bill Outlawing “Gag Clauses” That Try To Punish Customers For Writing Negative Reviews

Image courtesy of Jennifer Moo

We’re nearing the finish line for a piece of legislation that will make it illegal for companies to put so-called “gag orders” in their customer contracts to prevent consumers from sharing their honest opinions with the rest of the world.

This afternoon, by a simple voice vote with no apparent objections, the House passed the Consumer Review Fairness Act, a bipartisan piece of legislation that would void any existing non-disparagement clauses in consumer contracts and give the Federal Trade Commission and state attorneys general the authority to take enforcement action against businesses that attempt to use “non-disparagement” clauses to quiet consumers.

As we saw in instances like the recent nonsense involving a Texas petsitter that sued a customer for $1 million over a negative Yelp review, a number of businesses insert provisions into contracts and terms of service declaring that if the customer writes or says anything negative about the transaction, the company can seek damages.

The case that brought this issue into the spotlight involved a 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.

But there were also the cellphone accessory sellers who would fine you $250 for even mentioning you’d say something negative, the wedding contractors who made newlyweds agree to not “encourage” negative feedback, and the apartment complex that claimed to hold the copyright on all tenants reviews and photos of the property.

In 2014, California banned the use of these clauses, but a subsequent nationwide legislative effort stalled on Capitol Hill.

Then in late 2015, the Senate unanimously passed its version of the bill, the Consumer Review Freedom Act.

Congressman Leonard Lance (NJ) and Rep. Joe Kennedy (MA) took up the cause in the House this spring with the Fairness Act. Though the bill garnered significant bipartisan support, it still took quite some time getting to the House floor for a vote. With today’s passing, the House version goes back to the Senate for reconciliation. Given the near-identical texts, that should not take long. At that point, it would finally go to the President for signing into law.

“This bill is about protecting consumers posting honest feedback online,” explains Rep. Lance. “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. Too many companies are burying non-disparagement clauses in fine print and going after consumers when they post negative feedback online. That needs to stop.”

Attorney Paul Alan Levy from Public Citizen, who was involved in both the KlearGear and Texas petsitter cases, tells Consumerist that the passing of the Fairness Act is great news for the consumer, “but it is also good news for businesses that do not need to paint a false picture of themselves by suppressing truthful criticisms in order to secure more customers, and for business harmed by competition from those businesses that do need to paint a fraudulent picture of themselves by using non-disparagement clauses.”

Likewise, our colleague, George Slover, Senior Policy Counsel for Consumers Union, expressed CU’s continued support for the bill.

“These non-disparagement clauses are an outrageous attempt to silence the consumer voice,” says Slover. “We’re glad the House has voted to move forward with this bipartisan bill to outlaw these clauses, and we’re going to keep pushing to get it signed into law.”

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.