Online consumer reviews have become a staple of the digital age. Consumers have numerous platforms to tell others about their experience with service and goods providers. Many online retailers, such as Amazon, now give options for customer reviews. Then there are sites like Yelp that are exclusively for consumer reviews, and then there are Twitter, Facebook and other social media.

Over the past several years, more and more companies have attempted to curtail customer reviews, bad reviews, that is. They do this via contracts or terms of use agreements, referred to as gag or disparagement clauses, where the user/consumer agrees not to post any negative reviews about the company.

The question has been are these contracts/agreements legally binding?

Well, we may finally have an answer.
Last week Congress passed the Consumer Review Freedom Act. In a nutshell, this bill says that people have a right to post truthful negative reviews online, and that companies cannot take that right away, even if the consumer signed a contract or agreed to terms of service stating they will not.
As is often the case, many consumers often fail to read the detailed fine print before signing off on an agreement.
Recently a Dallas pet-sitting company called Prestigious Pets sued a couple for $1 million for posting a one-star review on Yelp. The company pointed out that the defendants violated the contract they signed, which contained a disparagement clause.
In another recent case, Lan Cai, a Texas student, was sued by a law firm that represented her in an injury lawsuit resulting from a car accident. The student was not satisfied with the services received from the Tuan A. Khuu law firm and posted a negative review on Yelp, as well as posting her dissatisfaction on her personal Facebook page. The judge ruled with the defendant and ordered the law firm to pay her $27,000 for legal fees.
Due to the increasing frequency of these types of lawsuits, Yelp and other online companies have been urging Congress to take action on this issue. Yelp stated that although all companies don’t use gag clauses, they create a “chilling effect” on reviewers.
The Consumer Review Freedom Act now awaits the signature of President Obama.

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