As you enter the new year of 2018, you probably are planning to eat at restaurants, stay in hotels, visit doctors and other professionals, and shop online and in stores. Before spending your hard-earned dollars, you may be one of millions of people who go to review sites, like Yelp, to make sure that you will be spending your money at establishments that have earned favorable reviews. But what happens when vendors and providers require contractual clauses that ban consumer reviews? Enter the Consumer Review Fairness Act of 2016.
In his paper titled Understanding the Consumer Review Fairness Act of 2016, Santa Clara University School of Law Professor Eric Goldman explains that “[c]onsumer reviews are vitally important to our modern economy” and that “[m]arkets become stronger and more efficient when consumers share their marketplace experience and guide other consumers toward the best vendors and away from poor ones.”
Indeed, as Professor Goldman correctly understands, companies appreciate the vital importance of consumer reviews, and as a consequence, many of them develop numerous stratagems “to manage how consumer reviews affect their public image.” But as he points out, some companies regrettably have employed contractual provisions that “ban or inhibit their consumers from reviewing them.”
Professor Goldman explains that these anti-review clauses “distort the marketplace benefits society gets from consumer reviews by suppressing peer feedback from prospective consumers, which in turn helps poor vendors stay in business and diminishes the returns that good vendors get from investments in quality (thus degrading their willingness to make those investments).”
Congress outlawed anti-review clauses as part of the Consumer Review Fairness Act of 2016 (CRFA). The House Report, cited by Professor Goldman in his paper, provides that the statute is designed “to preserve the credibility and value of online consumer reviews by prohibiting non-disparagement clauses restricting negative, yet truthful, reviews of products and services by consumers.”
This purpose behind the CRFA should be relatively plain. What value would there be to consumer reviews if all of them were extremely positive, with no possibility of negative or mixed reviews? There would be no basis for differentiation and comparison when consumers seek to evaluate vendors and providers.
Professor Goldman concludes that the CRFA is a “speech-enhancing” statute. He states that the First Amendment “simply sets a constitutional floor on the level of free speech in our society,” and that “[l]egislatures are allowed to, and often do, statutorily protect free speech above the Constitutional minimum.” Here, the CRFA “promotes consumers’ rights to speak out about the businesses they transact with; and it does so for the right reason — because protecting high-value speech improves our society.”
In the end, Professor Goldman correctly points out that the CRFA is part of the legal “infrastructure” that supports consumer reviews — and unfettered reviews help the marketplace to “thrive.”