Are Your Consumer Contracts Being Invalidated By The Consumer Review Fairness Act?

On March 14, 2017, the Consumer Review Fairness Act (CRFA) will officially invalidate a whole bunch of consumer contract clauses that pertain to online reviews.

During the last decade, we started hearing reports about professionals using form contracts to prevent their clients or patients from publishing negative online reviews. Here’s an example of how it worked: You showed up for a dentist appointment and, among the other forms you were asked to sign, they handed you a contract related to any future online reviews you might publish about that dentist. By signing the contract, you promised not to publish any negative reviews and/or you assigned the copyright to such reviews to the dentist. Thus, if you published a review that the dentist didn’t like, he or she could “take it down” pursuant to the Digital Millennium Copyright Act, and also seek other remedies against you pursuant to the contract. Pretty soon, other kinds of companies (such as, famously, started placing similar provisions in their online click-wrap agreements. Don’t want to sign the agreement?  Ok, but how badly does that tooth hurt?

Whether these contracts were enforceable under the common law was a disputed and debatable issue. But now it is also a moot issue. The CRFA, signed into law by President Obama in December and codified at 15 U.S.C. § 45b, invalidates any portion of a standardized form contract that purports to restrict a consumer’s right to publish reviews (online or otherwise), or to punish the consumer for publishing such reviews. The CRFA also invalidates any purported transfer of intellectual property rights in a review from the consumer to the company. The CRFA applies to contracts entered into after March 14, 2017, and those that are in effect as of March 14, 2017. A violation of the CRFA will be treated as an unfair or deceptive act or practice pursuant to the Federal Trade Commission Act.

What should you do to comply with the CRFA?

Simple. Remove any prohibited clauses from your standardized consumer contracts. This applies to online contracts and also to those quaint pieces of paper we used to call contracts.

What happens if you are reading this after March 14, 2017, but your contracts still contain prohibited language?  Don’t panic.  You can and should no longer seek to enforce those clauses, and you should change them ASAP. However, it bears noting that the authority to enforce the CRFA, which will be vested in the Federal Trade Commission (FTC) and the states attorney general, doesn’t actually kick in until December 14, 2017. That gives you, if not a grace period, at least some time to get your house in order before mom and dad get home.

More information about the CRFA and anticipated enforcement thereof is available on the FTC’s website.


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