Congress recently passed a law that makes it harder for businesses to sue customers for leaving negative reviews for their products or services. News of the bill’s advancement came after a recent victory for Yelp, Inc. after a court ruled in the review site’s favor in a recent dispute.
The Consumer Review Fairness Act is now law. The Act would prohibit businesses from adding non-disparagement clauses into their contracts with customers, which effectively prevents consumers from leaving negative reviews.
A California federal appeals court also ruled recently that Yelp, Inc. was not liable for any negative reviews posted to its site about a locksmith business in Washington state.
Douglas Kimzey, a Seattle locksmith, filed the suit against Yelp after two negative reviews were posted about his business. Kimzey argued that Yelp transforms its users’ reviews into its own content.
Yelp argued that under current law, it is not liable for hosting content written by its users. The appeals court agreed, and upheld that Section 230 of the Communications Decency Act protected the company. By law, content providers are generally not liable for content published by third parties.
Kimzey says he plans on appealing the ruling, and claims he has lost 95% of his business because of the negative reviews.
The pending law allows consumers to share their true opinions of their experience with businesses. Brad Young, TripAdvisor’s assistant general counsel, said that gag clauses have become increasingly common, which threatens review systems that consumer rely on.
Businesses are not permitted to include clauses in contracts that restrict consumers from leaving truthful reviews. The FTC (Federal Trade Commission) would be in charge of enforcing the bill.