Lawmakers Look to Protect Consumers’ Critical Online Reviews

Posted November 5, 2015 at 10:30am

Lawmakers are mulling legislation to protect consumers’ right to criticize businesses online, even when the consumers have agreed to obscure clauses the businesses use to safeguard their reputations.

“A core tenet of the Internet is the ability to share information with whoever you want,” said Senate Commerce, Science and Transportation Chairman John Thune, R-S.D., who called such clauses anti-consumer.  “What good is information if it has been sanitized to remove truthful information?”

Spurred by the rising use of such clauses, the committee held a hearing Wednesday on a bipartisan bill that would aim to protect consumers from incurring large fees for critical reviews of businesses. Similar bipartisan legislation (HR 2110) has been introduced in the House.

The Consumer Review Freedom Act (S 2044) would prohibit so-called “gag clauses” in business contracts with consumers. Some Senators said online contracts or terms of service often appear only in pop-up windows with many lines of fine print, requiring the consumer to click “I accept” to proceed with a transaction.

“Almost no one reads them, but they can have major consequences,” said ranking member Bill Nelson, D-Fla.

Several senators said that such clauses infringe on consumers’ First Amendment right of free speech.

Online reviews of a wide range of businesses have become increasingly popular with sites like Yelp, TripAdvisor, Amazon and Angie’s List.

Even when consumers know about gag clauses in contracts, they often lack the leverage or knowledge to have those non-negotiable sections removed, said Adam Medros, senior vice president for global product at the travel booking and review website TripAdvisor, which hosts travelers’ reviews on everything from hotels to tour guides. The company supports the legislation.

Thune said businesses would still be able to pursue defamation cases if a consumer leaves an inaccurate negative review.

The committee also heard from Utah resident Jen Palmer, whose experience and multi-year battle with the online retailer KlearGear.com drew lawmakers’ attention.

Palmer’s husband placed an order in 2008 from KlearGear.com for merchandise costing less than $20. When the company failed to deliver the goods and canceled the order after the couple contacted customer service, Palmer said she left a critical review about the experience on the website Ripoff Report. The online retailer KlearGear.com sells whimsical gadgets and toys and lists an address in Phoenix, Ariz.

In 2012, KlearGear.com demanded a $3,500 fee unless Palmer removed the review, citing a non-disparagement clause that Palmer says was not part of the company’s terms of service when her husband tried to make his purchase years earlier. 

KlearGear.com reported the unpaid $3,500 fee to a credit monitoring agency, a development that Palmer said hurt her husband’s credit score for more than 18 months. The couple eventually took their case to federal court, where a judge ruled in their favor in 2014.

 “Companies should not have the power to restrict consumer speech or punish people who criticize them. It needs to stop,” Palmer told the committee.

Thune applauded Palmer for staying engaged with the issue. Not all consumers faced with such fees fight them.

“Most consumers give up,” said Ira Rheingold, executive director of the National Association of Consumer Advocates.

Thune said he plans to make a few changes to the bill and hopes to have a markup in the next few weeks.