The FTC Has Taken Action Against Businesses Violating the Consumer Review Fairness Act for the First Time

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Imagine companies having the ability to ban their customers from writing negative reviews about them. First of all, this would seem to lead to negative press for the company in question. Secondly, it’s illegal. The Federal Trade Commission (FTC) just announced a new regulation aimed at combating companies from including non-disparagement clauses in form contracts.

The New Rules

Here’s what part of the press release says: “The Federal Trade Commission has issued three separate proposed administrative complaints and orders enforcing the Consumer Review Fairness Act (CRFA), which prohibits businesses from using form contract provisions that bar consumers from writing or posting negative reviews online, or threatening them with legal action if they do.”

These new rules, therefore, act as an enforcement of an Act that has already been approved: the Consumer Review Fairness Act (CRFA).

Putting Companies on Notice

The FTC’s new rules should be followed by any business that is considering censoring their customers. GatherUp—a website which covers information about online and customers reviews—has quite a bit to say about these new rules.

In one section, GatherUp focuses on the fines that guilty companies will incur. GatherUp writes, “While the penalties are minor, the companies agreed to file on-going compliance reports and when the FTC issues a final consent order, any additional violations will result in civil fines of up to $42,530 per violation.”

$42,530 per violation should scare any business away from trying to control what their customers write about them. Furthermore, even one of these violations could potentially put many local, smaller companies out of businesses.

GatherUp gives us a few examples of why the FTC needed to put out their new rules. From the FTC announcement, GatherUp writes about Waldron HVAC. They write, “Pittsburgh-based Waldron HVAC used a “confidentiality clause” in its form contracts that – among other things – imposed “the actual amount of damages suffered or two times the contract price” if a consumer told anyone about the terms of the contract. In addition, the clause provided that “Customer also agrees not to file any complaints with the Better Business Bureau.”

Featured photo by Clker-Free-Vector-Images on Pixabay