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Senate Wants to Remove 'Gag Clauses' for Negative Online Reviews

By Jonathan R. Tung, Esq. on November 05, 2015 | Last updated on March 21, 2019

The Senate Commerce Committee has steadily moved forward to passing legislation related to online gag clauses, which significantly limit or penalize customers who leave negative online reviews of companies.

Yesterday morning, senators held a hearing on the Consumer Review Freedom Act, which would make the inclusion of a non-disparagement clause in a consumer contract a violation of the FTC.

Contract Away Your Right to Honest Review

Some businesses have recently gotten into the habit of including "gag clauses" in their contracts. These clauses provide that the potential customer must agree not to write or say anything negative about that business even if the review is made entirely in good faith and honesty. The inclusion of this dubious bargaining chip has seen use in everything from dentists to mobile phone accessories.

Currently, there is no national consensus on whether such gags are legal or not. Previous attempts to nationalize some standard never moved forward and the current bill has been in Committee for most of 2015.

Some courts have deemed such clauses unconscionable while other courts have been very reluctant to interfere, citing freedom to contract.

Horror Stories

It's very easy to sympathize with other consumers. Jen Palmer, a witness at the hearings yesterday, described how an online merchant in 2012 claimed that she owed them $3,500 in damages after she posted a negative review of the business. When the company reported the matter to the credit rating agencies, they were unable to get a loan for a new furnace and had to wrap their son up in blankets during the winter to stay warm. Eventually, they won in court with the help of a consumer advocacy group.

Such stories are known throughout the web and strike fear in the hearts of many consumers, causing them to think twice about even leaving a detailed and honest review. It's the details that companies often find most damaging, generally prompting them to fall on the offending consumer like a ton of bricks.

On the Other Hand

As much as the tactic is ripe for abuse, it's also easy to sympathize with legitimate company concerns about decreasing the number of "troll" reviews -- spurious, spiteful, often poorly written dross tailored for the purpose of defaming rather than offering a genuine review.

Today, the power to review is at the fingertips of anyone -- even those with no previous engagement with the company or its wares. At the same time, companies are often equally guilty of propping up their own online reputation with fabricated 5-star reviews.

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