House passes bill making it illegal to sue for bad online reviews

Fiscal retribution a thing of the past

The U.S. House of Representatives finally passed a bill that will make it illegal for companies to put “gag clauses” in their contracts that block or penalize customers for posting negative online reviews. It’s expected to move through the Senate soon.

This is not the first time I’ve reported on this issue (you can read more here) so it’s nice to see there is some sense of resolution taking place that supports the consumer.

Action and reaction

Just to recap a bit. This bill, officially called the Consumer Review Fairness Act, is a bipartisan piece of legislation that will void any existing non-disparagement clauses in consumer contracts and give the Federal Trade Commission and state attorneys general the authority to take enforcement action against businesses that attempt to use “non-disparagement” clauses to quiet consumers.

Crazy stuff, right?

But the bill is a reaction to several lawsuits that have been levied by companies trying to penalize their customers who speak poorly about them online.

Forget about free speech. A number of businesses insert provisions into contracts and terms of service declaring that if the customer writes or says anything negative about the transaction, the company can seek damages.

For example, points out an Consumerist, gadget and apparel company KlearGear once sued a costumer for nearly $4,000 because the individual wrote a negative review online.

Or how about this one: a pet-sitter sought 1 million dollars in damages over a negative Yelp review.

All it takes is a voice

Congressman Leonard Lance (NJ) and Rep. Joe Kennedy (MA) took up the cause in the House this spring with the Fairness Act. Though the bill garnered significant bipartisan support, it still took quite some time getting to the House floor for a vote.

The issue at stake is about posting and protecting honest feedback online.

Explains Rep. Lance, “Online reviews and ratings are critical in the 21^st Century and consumers should be able to post, comment and tweet their honest and accurate feedback without fear of retribution. Too many companies are burying non-disparagement clauses in fine print and going after consumers when they post negative feedback online.”

Onward and upward

Now that the bill has passed the House, it goes to the Senate. That would normally seem like another political roadblock, but seeing as how the Senate already passed a version of the same bill last year, all that’s left really is ironing out the small print in order to combine the two versions before pushing forward for the President to sign.

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