Watch Out for Non-disparagement Provisions in Your Consumer Contracts-The FTC Takes Action

The Federal Trade Commission (FTC) is focusing efforts on enforcing non-disparagement provisions in contracts that restrict reviewers in what they can and cannot say in reviews they post about companies. Businesses should be aware of what these provisions are and how to avoid them. Signaling its focus, on May 8, 2019, the FTC announced that it issued three proposed administrative complaints and orders under the Consumer Review Fairness Act (CRFA). The CRFA is a federal law that became effective in 2017 and has an underlying purpose of stopping businesses from standing in the way of consumers giving honest reviews. Generally, with some exceptions, CRFA does not allow form contracts that (a) prohibit/restrict people's reviews; (b) impose a penalty/fee for the review; or (c) requires transfer intellectual property in such review (except for non-exclusive licenses). Taken as a whole, the CRFA prohibits non-disparagement language in consumer contracts where the consumer does…

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