WASHINGTON – Today, the U.S. Senate Commerce, Science, and Transportation Committee approved an amended version of S. 2044, the Consumer Review Freedom Act, introduced by Chairman John Thune (R-S.D.), Communications, Technology, Innovation, and the Internet Subcommittee Ranking Member Brian Schatz (D-Hawaii), and Consumer Protection, Product Safety, Insurance, and Data Security Subcommittee Chairman Jerry Moran (R-Kan.). The bipartisan bill is also co-sponsored by the full committee’s Ranking Member, Senator Bill Nelson (D-Fla.), and Sens. Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Steve Daines (R-Mont.), and Claire McCaskill (D-Mo.).
The Commerce Committee held a hearing on the issue on November 4, 2015, with testimony from Ms. Jen Palmer, a plaintiff in Palmer v. KlearGear, where a company demanded the removal of a negative online review or payment of $3,500 in fines because the online merchant’s terms of service included a non-disparagement clause. When the review was not taken down, the company reported the unpaid $3,500 to a credit reporting agency as an outstanding debt, which negatively impacted the Palmers’ credit.
“Reviews offering blunt and honest criticism play an increasingly important role in helping customers select the best products and services,” said Thune. “The Consumer Review Freedom Act is needed so consumers can benefit from the experiences of others through the open exchange of information.”
“Honest reviews on websites like Yelp and TripAdvisor encourage better business practices, promote competition, and give consumers a place to share their experiences and offer feedback,” said Schatz. “These consumer reviews help so many of us decide what to buy and where to eat or stay, and no business should have the right to intimidate or stop consumers from sharing their opinions. We’re making some good progress on our bill, and I will continue to work with Senators Thune and Moran to get the Consumer Review Freedom Act through Congress and onto the President’s desk.”
“Advancement of this legislation through the Commerce Committee puts us one step closer to making certain Americans are able to express their opinions online without the threat of lawsuits that stifle honest feedback and unfairly punish consumers,” said Moran. “Word of mouth has long been at the center of how we learn about new products and services or determine the strengths and weaknesses of existing ones, and its role is no less important in the online marketplace. I hope to soon see this commonsense legislation passed by the full United States Senate.”
Gag clauses now appear in a large number of non-negotiable form contracts. A form contract is when a party leverages its outsized bargaining power to impose standardized terms without a meaningful opportunity for the other party to modify the contract. Some businesses have sought to use these clauses to penalize or pursue fines from customers for negative but honest reviews of their services on websites such as Yelp or TripAdvisor. The Consumer Review Freedom Act bans this practice.
Similar bipartisan legislation, H.R. 2110, has been introduced in the U.S. House of Representatives by Reps. Darrell Issa (R-Calif.), Eric Swalwell (D-Calif.), Blake Farenthold (R-Texas), Anna Eshoo (D-Calif.), Brad Sherman (D-Calif.), and Steve Cohen (D-Tenn.).
Click here for a copy of the legislation as amended in today’s markup.