Senators Propose Legislation To End Gag Clauses For Online Reviews

After Jen Palmer had a bad shopping experience on KlearGear.com, she left a negative review online and was subsequently shocked to receive notice from the company demanding that she remove the negative review or pay $3,500 for violating an alleged “non-disparagement clause” on their website.

Palmer and her husband found themselves in a years-long battle with KlearGear, which they sued after the company continued to contact them and ultimately tainted their credit scores.

Now, a bipartisan group of senators is considering legislation that would protect online reviewers from facing the type of intimidation and retaliation that Palmer and her husband experienced. The Consumer Review Freedom Act would bar the use of non-disparagement clauses, sometimes referred to as “gag clauses,” in form contracts between businesses and consumers.

The proposed legislation is sponsored by Sens. John Thune, R-S.D.; Jerry Moran, R-Kan.; and Brian Schatz, D-Hawaii.

“Our committee spends a significant amount of time focusing on how we can increase broadband adoption and create policies that unlock the true potential of the Internet, but speech-stifling contract terms undermine what we’re trying to accomplish in Internet policy,” Thune said in his prepared opening statement at a Senate Commerce Committee hearing. “A core tenet of the Internet is the ability to freely share information with whomever you like. What good is information if it’s been sanitized to remove truthful criticism? Simply put, imposing consumer gag clauses can result in unfair bullying.”

Thune explained the Consumer Review Freedom Act would also empower the Federal Trade Commission to enforce the new rules, while continuing to allow companies to pursue good faith defamation claims.

Auto dealerships have long been aware of the suspicious nature of online review sites, from companies like Yelp, amid many allegations of unfair practices by both businesses and the review sites themselves. It can be hard to trust the ratings that exist on these platforms, as there have been many claims of businesses being forced to purchase ads in order to retain positive reviews, as well as consumers being told that they must remove negative reviews to avoid violating gag clauses. The proposed legislation would seek to alleviate the latter issue by allowing consumers to share their marketplace experiences online freely without any fear of repercussions.

At the Senate Commerce Committee hearing, senators were in agreement that consumers should be encouraged to share honest reviews on the Internet. “In a state like mine, Florida, that’s so dependent on tourism, we want visitors to share their experiences,” said Sen. Bill Nelson, D-Fla.

Robert Atkinson, founder and president of the Information Technology and Innovation Foundation (ITIF), told the senators that society has reached a “tipping point” where consumer protections are needed, or else the public may abandon the custom of posting online reviews.

“People should be encouraged to leave reviews,” Atkinson said. “They’re actually being a public citizen, they’re taking their valuable time. If we have a collective climate of fear, then people are not going to be able to do it.”