Form Contract Provisions That Prohibit Social Media Customer Reviews May Be Void

Pursuant to the new federal Consumer Review Fairness Act of 2016, form contract provisions are void if the provision:

• prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication;
• imposes a penalty or fee against an individual who is a party to the form contract for engaging in a covered communication; or
• transfers or requires an individual who is a party to the form contract to transfer to any person any intellectual property rights in review or feedback content, with the exception of a non-exclusive license to use the content, that the
  individual may have in any otherwise lawful covered communication about such person or the goods or services provided by such person.

Under the new law a “covered communication” is “a written, oral, or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party”. The statute defines a “form contract” as a contract with standardized terms (i) used by a person in the course of selling or leasing the person’s goods or services; and (ii) imposed on an individual without a meaningful opportunity for such individual to negotiate the standardized terms. It does not include an employer/employee or independent contractor contract.

There are many exceptions to the new statute, as it is not meant to affect “any civil cause of action for defamation, libel, or slander, or any similar cause of action”. The statute may be enforced by the Federal Trade Commission or a State Attorney General in Federal Court.

Before you attempt to limit the right of any person to post a review, contact your attorney to ensure you do not run afoul of this new law.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.