Form “Non-Disparagement” Clause Violated Consumer Review Fairness Act–State v. Ideal Horizon Benefits

March 2, 2023 · by · in Licensing/Contracts

In 2016, Congress enacted the Consumer Review Fairness Act (CRFA), which bans businesses from trying to contractually restrict their customers’ reviews. It represents a rare federal intervention into contract law, and it does so for good reasons–to reduce the ability of businesses to manipulate the consumer review ecosystem by wiping away negative reviews and leaving only positive reviews. See this explainer I wrote after its passage.

At the time of passage, I’m not sure how many businesses were actually using contracts to control their customers’ reviews, but it was a growing trend. The law reversed that trend and largely (but not completely) wiped away the business practice. As a result, we don’t see CRFA cases very often, and we almost never see them as “standalone” cases where they aren’t piggybacking on other enforcement efforts. Today’s opinion is such a piggyback.

The case involves Solar Titan, a vendor of solar installations. Tennessee and Kentucky sued it over its marketing practices, such as allegedly overclaiming buyers’ eligibility for tax credits.

Solar Titan’s form contract contained the following provision:

Buyer agrees not to use any form of social media to express their opinion that could be portrayed as negative in the eyes of the public towards or about Ideal Horizon Benefits. Breaching acceptance of this clause by buyer can and will deem monetary compensation benefits to Ideal Horizon Benefits, LLC/Solar Titan USA.

This is an easy case. Solar Titan admitted the violation but argued that (1) it didn’t realize the clause broke the clause, and (2) counsel had blessed it. The court is unmoved: “This provision clearly prohibits or restricts the ability of a Solar Titan customer to engage in a covered communication in violation of the CRFA.”

Case citation: State v. Ideal Horizon Benefits, LLC, 2023 WL 2299570 (E.D. Tenn. Feb. 28, 2023)

Prior posts on the Consumer Review Fairness Act and related topics

See also:

The leader of the “gag your consumers’ reviews” bandwagon was Medical Justice, and the CRFA squarely targeted its practices. See my extensive blog coverage of Medical Justice.