Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Consumer Review Fairness Act Prohibits Contracts Banning Bad Reviews

Author: Scarinci Hollenbeck, LLC

Date: January 26, 2017

Key Contacts

Back

With Consumer Review Fairness Act Passed, Online Reviews to Become More Credible in 2017

Consumer Review Fairness Act 2016

Online reviews are poised to become more credible in the New Year. Former President Barack Obama recently signed the Consumer Review Fairness Act of 2016 into law. The new law prevents businesses from contractually prohibiting consumers from posting negative online reviews.The new law addresses the increasing use of consumer agreements to deter negative criticism via websites like Yelp. In basic terms, non-disparagement clauses impose monetary or other penalties on customers who post negative online reviews about a company’s products or services. In one highly publicized case, a New York hotel required couples that rented its wedding facility to sign a contract stating that they would be required to pay a $500 fine for every negative review posted by the couple or their guests.

Cracking Down on Non-Disparagement Clauses

The Consumer Review Fairness Act of 2016 voids a provision of a form contract if such 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 law, a “covered communication” is defined as “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.”

Limitations and Enforcement of Consumer Review Fairness Act

Businesses should be aware that the Consumer Review Fairness Act only applies the non-disparagement clauses in consumer contracts and not other types of business agreements. For instance, the Act expressly states it does not apply to employer-employee or independent contractor contracts. It also does not interfere with civil actions for defamation, libel, or slander; a party’s right to establish terms and conditions for content created by an employee or independent contractor; or a party’s right to remove or refuse to display content that contains personal information or obscene or inappropriate material.

The Federal Trade Commission (FTC) is empowered to penalize violators under its authority to prevent deceptive trade practices and unfair competition. On the state level, attorneys general are also authorized to bring actions under the new law.

The Consumer Review Fairness Act mandates that the FTC publish best practices for compliance within 60 days of the its enactment. We encourage businesses to check back for updates.

Do you have any questions about the Consumer Review Fairness Act or how it may affect you? Would you like to discuss the matter further? If so, please contact me, Dennis Linken, at 201-806-3364.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Can You Change an Irrevocable Trust in New Jersey? post image

Can You Change an Irrevocable Trust in New Jersey?

In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]

Author: Marc J. Comer

Link to post with title - "Can You Change an Irrevocable Trust in New Jersey?"
How Intellectual Property Valuation Will Impact Business Transactions post image

How Intellectual Property Valuation Will Impact Business Transactions

Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]

Author: Jay McDaniel

Link to post with title - "How Intellectual Property Valuation Will Impact Business Transactions"
Data Center, Dark Fiber, and Lit Services Agreements in New Jersey: Key Terms and Legal Pitfalls post image

Data Center, Dark Fiber, and Lit Services Agreements in New Jersey: Key Terms and Legal Pitfalls

For New Jersey data center owners and operators, a service agreement may look routine when it is signed. The network is functioning, the vendor is meeting its installation schedule, and the parties have agreed on pricing and performance specifications. The provisions that seem most important at that stage are often the technical ones. That changes […]

Author: George McGowan

Link to post with title - "Data Center, Dark Fiber, and Lit Services Agreements in New Jersey: Key Terms and Legal Pitfalls"
Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate post image

Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate

The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]

Author: Donald M. Pepe

Link to post with title - "Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate"
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand post image

Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand

Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]

Author: Donald M. Pepe

Link to post with title - "Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand"
Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them post image

Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them

The five most common real estate disputes are breach of contract claims, landlord-tenant conflicts, zoning and land use disagreements, construction claims, and boundary disputes. Understanding why each arises, and taking preventive steps early, can help property owners, tenants, developers, and investors avoid costly litigation. Key Takeaways: Real estate transactions are complex endeavors involving numerous parties […]

Author: Paul Grossman

Link to post with title - "Real Estate Litigation Explained: Top 5 Disputes and How to Avoid Them"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form. By providing a telephone number and submitting this form you are consenting to be contacted by SMS text message. Message & data rates may apply. Message frequency may vary. You can reply STOP to opt-out of further messaging.
“If you would like to submit a file, please email it directly to info@sh-law.com.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!