Online Business Law: What You Need To Know About The Consumer Review Fairness Act

August 29, 2018

Two years after lawmakers green lit the Consumer Review Fairness Act, FTC commissioners are using it to charge a company for allegedly rigging online reviews. The related case is a great reminder about the potential dangers of manipulating customer feedback.

What Is The Consumer Review Fairness Act?

Back in 2016, to curb frivolous online defamation lawsuits and protect citizens’ First Amendment rights, federal representatives passed the Consumer Review Fairness Act.

The statute is straightforward. By law, businesses can’t force actionable non-disparagement and intellectual property clauses onto contract signatories in an attempt to curtail negative online reviews.

Now, the Consumer Review Fairness Act doesn’t render all non-disclosure and non-disparagement clauses moot. The regulation only applies to online reviews and feedback.

Inaugural Consumer Review Fairness Act Lawsuit: Non-Disparagement Clause Anchors Charge

A company we’ll call “Online Retail Tips” sold aspiring e-commerce entrepreneurs “a system for selling products on Amazon.” According to reports, the company hawked a range of courses that cost between $500 and $33,000. Marketing materials for the program allegedly promised participants a $20,000 monthly windfall if they worked it right.

But to get their hands on the gold mine of e-commerce secrets, Online Retail Tips made buyers sign contracts that included non-disparagement clauses.

Things, however, didn’t work as advertised for the majority of ORT’s students.

Ultimately, the FTC slapped Online Retail Tips with deceptive marketing charges and claimed it violated the Consumer Review Fairness Act via its non-disparagement clause.

This case is noteworthy because it’s the first time the FTC has hung a charge on the Consumer Review Fairness Act.

Five Rules Regarding Online Reviews

What five things should every business and marketer know about online review legalities?

  • It’s against the law to leave negative, phony reviews on competitors’ listings. Doing so frequently meets the defamation standard.
  • Brands and companies are responsible for affiliates’ and influencers’ actions. As such, if a marketer working on your behalf posts false and materially damaging reviews about competitors, you could be held responsible.
  • Many e-commerce platforms, including Amazon, don’t allow incentivized reviews. Breaking the rules can result in a permanent suspension.
  • Adding “in my opinion” to social media posts or online reviews isn’t a  libel invisibility cloak. Depending on the circumstances, statements wrapped in qualifiers can be defamatory.
  • Defamation by implication is an actionable offense. As such, plausible deniability isn’t always an effective strategy.

Connect With An FTC Defense Lawyer

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