Businesses Cannot Contractually Ban “Abusive” Consumer Reviews
An article recently posted to SSRN argues that the Consumer Review Fairness Act (CRFA) purportedly lets businesses contractually ban “abusive” reviews. If this is correct, it could affect millions of businesses and hundreds of millions of consumers. However, the article’s argument is clearly wrong, and this error exposes millions of businesses to potentially severe liability. This post explains why and how.
Note: unavoidably, this blog post counterproductively draws greater attention to a bad argument. Because of the stakes, I concluded a public correction was, on balance, necessary. However, to reinforce my view that the article doesn’t merit your independent review, I’ve deliberately not identified the article’s author or title or linked to it (is there a blogging equivalent of subtweeting?). I recommend reading the article as “enthusiastically” as I “recommend” watching The Emoji Movie.
About the CRFA
Congress unanimously passed the bipartisan Consumer Review Fairness Act in 2016. The law prohibits businesses from contractually restricting their customers’ reviews. It voids any contracts that prohibit such reviews, impose penalties or fees for such reviews, or purport to take the IP rights to such reviews; and makes those contracts “unlawful.” For more specifics, see my 2017 primer about the law.
Although the CRFA eliminates one tool that businesses used to control their online reputation, many other legal tools remain available to businesses to protect themselves from bogus or false reviews. Both pre- and post-CRFA, businesses can sue review authors for reviews they’ve posted. The CRFA also leaves open the possibility that businesses can contractually ban “unlawful” reviews, including possibly “defamatory” reviews (I discuss this in my primer). The CRFA also doesn’t restrict any causes of action for “abusive” behavior, such as anti-harassment or anti-stalking laws.
A Summary of the Article’s Statutory Analysis
The CRFA has several exceptions to its operative provisions, including this exception in Section 2(b)(3):
[the restrictions] shall not apply to the extent that a provision of a form contract prohibits disclosure or submission of, or reserves the right of a person or business that hosts online consumer reviews or comments to remove…content that is unlawful or otherwise meets the requirements of paragraph (2)(C)…
Paragraph 2(b)(2)(C) says that the restrictions do not affect (emphasis added):
any party’s right to remove or refuse to display publicly on an Internet website or webpage owned, operated, or otherwise controlled by such party any content of a covered communication that–
(i) contains the personal information or likeness of another person, or is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic;
(ii) is unrelated to the goods or services offered by or available at such party’s Internet website or webpage; or
(iii) is clearly false or misleading
By collapsing the two provisions together and omitting many other words, the article argues that a “form contract” may “prohibit disclosure of content” that is “abusive.”
The term “abusive” in this context lacks any meaningful legal definition. The article suggests “abusive” includes mean reviews, not only illegal reviews. If correct, this statutory interpretation eviscerates the CRFA because businesses could contractually ban many negative but otherwise legal reviews, as well as make contract-based threats to deter negative reviews in the first place.
Why the Statutory Analysis Is Flawed
The statutory language quoted above was intended to allow consumer review services to manage their database of consumer reviews. Read this way, consumer review services’ terms of service can contractually restrict their users from “disclosing” or “submitting” reviews that are unlawful or that meet the (2)(C) requirements; and consumer review services can contractually reserve their right to remove such reviews. This statutory exclusion only applies to consumer review services, and cannot be converted into a general-purpose tool for suppressing abusive reviews, for the following reasons:
First, the “submission” verb pretty clearly applies only to consumer review services (or businesses running their own review function). It’s nonsensical for the provision to restrict “submissions” of reviews to third parties. The “disclosure” verb is parallel to the “submission” verb, so it should be read to apply to review services as well.
Second, characterizing a consumer review as a “disclosure” would be bizarre. That’s not a normal way to characterize public expressions of consumers’ experiences and opinions about the businesses they transact with. Furthermore, the statute has a defined term (“covered communication”) to describe consumer reviews, so why would Congress use an undefined synonym? Also, “disclosure” is referenced two more times in (3)’s exceptions (emphasis added):
(B) personnel and medical files and similar information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy;
(C) records or information compiled for law enforcement purposes, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy
Congress used the term “disclosure” to characterize violations of consumer privacy, not as a generic descriptor of consumer reviews.
Third, the word “abusive” is constrained by the introductory language in the (2)(C) exclusion, which expressly applies only to a website/webpage “owned, operated, or otherwise controlled” by the party. Businesses can’t restrict “abusive” content on third party services because they don’t own/operate/control those websites/webpages. In contrast, like other review services, businesses that run their own consumers review functions can ban, refuse to post, and remove abusive reviews submitted to them for publication without running afoul of the CRFA.
Fourth, the (2)(C) exclusion also only applies to the “right to remove or refuse to display publicly….” Like the submission/disclosure couplet, the “refuse to display” provision only makes sense for a review service because a business lacks the technical capacity to “display,” or “refuse to display,” content on third party services. The parallel “right to remove” language should be read the same way.
Fifth, the phrase “abusive content,” as opposed to abusive “behavior,” is not grammatically correct.
Finally, stepping back, the article’s conclusion contravenes the statute’s plain language and clear goals. Judges won’t interpret the statute tendentiously, using awkward grammar, to reach a conclusion that so clearly conflicts with the CRFA’s purpose.
For these reasons, no court will find that the CRFA permits contract bans on abusive consumer reviews. Accordingly, any business that attempts such a contractual provision will violate the CRFA and be exposed to enforcement actions by the FTC, state AGs, a California private cause of action under Business & Professions Code 17200 (as I explain in my primer), and other adverse legal consequences.
The Article’s Conclusion Conflicts with State Laws
I know of 3 states that have adopted similar laws to the CRFA:
California. California Civil Code 1670.8, enacted in 2014 before the CRFA was passed, says “A contract or proposed contract for the sale or lease of consumer goods or services may not include a provision waiving the consumer’s right to make any statement regarding the seller or lessor or its employees or agents, or concerning the goods or services.” It has the following exclusion: “This section shall not be construed to prohibit or limit a person or business that hosts online consumer reviews or comments from removing a statement that is otherwise lawful to remove.”
Illinois. Illinois 815 ILCS 505/2TTT, passed in 2017 with little fanfare, has a nearly identical restriction and exclusion as California.
Maryland. Maryland’s Section 14–1325, passed in 2016 also before the CRFA, has similar restrictions and exclusions as California’s law. Its exclusion says: “This section may not be construed to prohibit or limit a person: (1) that hosts online consumer reviews or comments from removing a statement that is otherwise lawful to remove; or (2) from including in a contract or a proposed contract for the sale or lease of consumer goods or services a provision prohibiting a consumer from disclosing proprietary information, techniques, or processes.” It also expressly says businesses can sue for defamation.
(Other state laws may also apply, such as NY’s consumer protection act as interpreted by the People v. Network Associates case).
All three state laws flatly prohibit a contract ban on “any statement” by the consumer, including any statement that would be defined as “abusive.” The exclusions do not provide any gap to argue otherwise. Thus, any contractual ban on “abusive” consumer reviews would violate the laws of all three states in addition to the CRFA. The remedies vary slightly between the states, but at minimum, violation of California’s law exposes businesses to statutory damages.
Congress is roundly (and often fairly) criticized for all it does wrong or never does at all, so we should celebrate the seemingly rare times it got something right–like the CRFA. Thus, I’m frustrated by an attempt to eviscerate one of Congress’ few good accomplishments from the past several years. I’m even more frustrated when the evisceration attempt is predicated on a flawed statutory analysis.
If you’re a business thinking about banning abusive reviews in your contract, I hope you got these two messages from this blog post: (1) that’s illegal, and (2) we’re coming for you, so see you in court.