Consumer Review Fairness Act 2016: The Implications

Last month, both the House and the Senate passed the Consumer Review Fairness Act, 2016. With the outgoing President Obama signing the bill on Dec 15, 2016, this law has finally been implemented, signaling big changes for small to medium sized businesses. According to legislators, the law will protect consumers who write reviews from companies as long as those reviews are honest. This legislation was spearheaded by the New Jersey Congressman, Leonard Lance, who is also Vice Chair of the Commerce, Manufacturing and Trade Subcommittee. His press release for the signing of this act broached upon the significance of reviews and how important it is to protect consumers while giving companies enough room to remove false and defamatory reviews. It took note of the importance of online reviews and ratings in the 21st century wherein consumers should be able to post, comment and tweet their honest and accurate feedback without the fear of litigation by companies. The press release also emphasized that crowdsourced reviews of local businesses and services are powerful sources of information which makes it important to maintain the integrity of reviews for the protection of consumers.

What's Been Happening

Businesses have become increasingly wary of the importance of five-star customer reviews and how that can influence the customers' purchasing decisions. Knowing this, some businesses have gone overboard in including gag orders or non-disparagement clauses in the terms and conditions on their websites in an effort to control their online ratings. Many even believe this intense supervision impedes on consumers’ first amendment rights.

How Customers Will Be Impacted

Many customers who leave reviews online often ignore reading the "fine-print" of terms and conditions after they make a purchase or use service. These uninformed customers may then face extreme consequences from businesses that include clauses that stipulate a fine or a lawsuit for those who write bad reviews or post negative comments on social media. The Consumer Review Fairness Act was written to protect consumers from these penalties simply for sharing their honest opinions.

How Businesses Will Be Impacted

If you are worried about the implications of this act for your business, breath easy as the former is not going to place any restrictions on the way you do business, as long as you don’t have any questionable terms and conditions on your review sites. The act only seeks to provide a level playing field to businesses vis-a-vis their customers, allowing them to earn five-star ratings the right way – by providing great products and customer service. The Consumer Review Fairness Act has annulled the non-disparagement clauses in contracts and terms and conditions statements. On the other hand, consumers have the ability to leave harsh, brutal reviews of businesses without consequences as long as they are essentially honest. What this means is that businesses will no longer be able to penalize customers for extremely negative reviews. Otherwise, they will have to deal with the Federal Trade Commission.

What It Means for Review Sites

Review sites like Yelp and TripAdvisor have adjusted quickly. The sites have begun posting warnings to prevent businesses from posting questionable terms and agreements that could be interpreted as threatening free speech. Amazon already has guidelines restricting businesses from posting fake reviews. This can make it difficult to manage online reputation. Fortunately, there is a solution.