Got a gripe with a business? Starting this year, you’ll be free to post that negative review online despite your contract’s fine print. This week, President Obama signed the Consumer Review Fairness Act of 2016 into law. It prohibits companies from issuing fines to users who post bad press and comes in response to a growing number of ‘gag clauses’ that sought to deter one-star reviews.
Since the proliferation of Yelp and other ranking sites, some businesses have been aggressive in fighting poor reviews. One classic case that made national headlines was the Union Street Guest House (USGH) in Hudson, NY. USGH charged wedding parties $500 for each bad review that wedding guests posted.
The Guest House received a lot of flak for this clause in its contract: “If you have booked the Inn for a wedding or other type of event anywhere in the region and given us a deposit of any kind for guests to stay at USGH there will be a $500 fine that will be deducted from your deposit for every negative review of USGH placed on any internet site by anyone in your party and/or attending your wedding or event.”
The hotel reportedly offered to refund the $500 if the negative post was removed then later claimed the clause was a joke. Customers cried ‘Foul.’
In the end, USGH experienced more grief than they probably expected including a deluge of over 1,000 negative reviews. USGH eventually closed its doors.
Another thin-skinned company recently made headlines early in 2017. Fertility Bridges Inc., a human egg donation service operating in several states, agreed to remove a gag clause from its contract that banned bad online reviews after the New Jersey Attorney General’s office sued. The clause threatened customers with fees of $10,000 per day for bad reviews.
“(T)he company’s “online reviews clause” effectively amounted to a “gag order” on dissatisfied consumers. The Division alleged that Fertility Bridges’ inclusion of the clause in its contracts, and subsequent attempt to enforce the clause, constituted unconscionable commercial practices in violation of the New Jersey Consumer Fraud Act,” the agency stated.
“Customers have the right to complain publicly about what they feel are substandard services rendered by a company,” said Attorney General Christopher Porrino. “This Consent Order, along with the just-signed federal law, reaffirms that right for all Americans.”
Sen. John Thune of South Dakota originally championed the new federal law, enforceable by either state attorneys general or the Federal Trade Commission. It passed the US Senate unanimously.
Thune applauded his fellow legislators. “By ending gag clauses, this legislation supports consumer rights and the integrity of critical feedback about products and services sold online.”