Schatz Partners in Consumer Review Act Introduction

On Thursday, the Consumer Review Freedom Act, S. 2044, was introduced to lawmakers. The Act would protect customers from unfair non-disparagement clauses that appear on a large number of non-negotiable form contracts.

The practice can occur when one party imposes a standardized contract without a meaningful opportunity for parties to modify the contract. These clauses can be used by businesses to penalize or seek fines from customers who give negative, but honest, reviews of their services on various websites like Yelp and TripAdvisor.

The Act was introduced by Senator Schatz, a ranking member of the Communications, Technology, Innovation, and the Internet, along with U.S. Senate Commerce, Science, and Transportation Committee Chairman John Thune and Consumer Protection, Product Safety, Insurance, and Data Security Subcommittee Chairman Jerry Moran.

According to Schatz, the clauses stifle consumer speech by silencing fair criticism in public forums, especially websites.

One instance was in a Utah case, Palmer v KlearGear.com, where a customer’s negative online review was demanded to be taken down or pay $3,500 in damages due to the websites non-disparagement in its terms of service. When the customer didn’t comply or pay the fine, it was reportedly sent to credit reporting agencies as an unpaid debt.

Under the Consumer Review Freedom Act, business practices that include non-disparagement clauses would be prohibited, but business owners would still be able to sue reviewers over dishonest misrepresentations about their business.

“Reviews on where to shop, eat, or stay on websites like Yelp or TripAdvisor help guide where consumers do business every day,” said Senator Schatz. “Honest reviews from real people have made these sites successful and are the reason why so many of us have come to rely on them. Every consumer has the right to share their experiences and opinions of any business. Our bill would protect that right and ensure consumers are free to share their views, free from intimidation.”  

Similar bipartisan legislation, H.R. 2110, has been introduced in the U.S. House of Representatives by Representatives Darrell Issa , Anna Eshoo, Brad Sherman, and Eric Swalwell of California, Blake Farenthold of Texas, and Steve Cohen of Tennessee.

The bill is expected to be referred to the Senate Commerce, Science, and Transportation Committee, chaired by Senator Thune.