About a month ago, we blogged about how the FTC brought its first-ever cases under the Consumer Review Fairness Act (CRFA) since the statute went into effect in 2017. Well, it looks like the FTC was just getting started, as it announced this week that it has issued administrative complaints and proposed orders against two more companies for allegedly violating the CRFA.
To briefly recap, the CRFA prohibits businesses from including “gag clauses” in their form contracts that bar consumers from writing or posting negative reviews. According to the FTC’s administrative complaint against Shore to Please Vacations LLC, the respondents did just that by including a disclaimer in its form contract for online vacation house rentals that stated “you agree not to defame or leave negative reviews (…as well as any review less than a ‘5 star’ or ‘absolute best’ rating) about this property and/or business,” and specified that “breaching this clause…will immediately result in minimum liquidated damages of $25,000.” Similarly, the FTC alleged that Staffordshire Property Management, LLC used form contracts that prohibited rental applicants from disparaging Staffordshire or publicizing any opinions or communications related to Staffordshire, the rental application, or the application process. Under the FTC’s proposed consent orders, both companies are prohibited from using non-disparagement clauses in standardized customer contracts, and they must notify affected consumers of their right to post honest reviews. In addition, Shore to Please Vacations is required to dismiss with prejudice a claim that it filed against a renter for violating its non-disparagement clause.
If this past month is any indication, this will not be the last we hear of CRFA-related complaints. If you haven’t already, check all of your form contracts to make sure they don’t contain gag clauses; they’re often baked into boilerplate language, so it’s easy to overlook or forget that they exist. Receiving negative reviews may be bad for business, but getting sued by the FTC is probably worse—so we recommend that you play fair and comply with the Consumer Review Fairness Act.