Q: Some of our clients access us through our website, where they can make online bookings. We have a set of terms and conditions, and we understand from your Legal Briefs columns that these terms are legally enforceable if we can show that the client agreed to them. What if we added a clause stating that the client must agree never to post a negative review on a review website like Yelp or TripAdvisor or in social media? What if we stated that the client would never get a refund if he posted a negative review? What if we provided that, if they post a negative review, we have the right to order the review site to take it down?
A: Until last year, I would have said that all such clauses were legally enforceable. Now, under a law called the Consumer Review Fairness Act (CRFA) that went into effect in March 2017, all these provisions would be illegal, and the Federal Trade Commission can fine you if you use them.
The CRFA makes it illegal for companies to include standardized provisions that threaten or penalize people for posting honest reviews. The law also makes it illegal for your terms and conditions to provide that you own the rights to any negative review so that you can tell the review website to take down the review.
However, there are some interesting exceptions to the law as well as areas that it simply does not cover.
The law applies only to consumer reviews. So a review posted by a corporate, institutional or group client would not be covered, which means that you could prohibit negative reviews in your contracts with such clients.
The law applies only to "form contracts," which are defined as those "imposed on an individual without a meaningful opportunity for such individual to negotiate the standardized terms." So if you negotiate the itinerary and price of a customized package contract with a leisure client, you could indeed prohibit negative reviews.
The law does not apply to employment or independent contractor contracts. So you could prohibit an employee from posting a negative review or comment about your agency on sites such as Glassdoor. For ICs, there is a review site called Host Agency Reviews, and you could theoretically prohibit your ICs from participating, although trying to enforce such a ban would certainly be tough.
The law does not apply to reviews that are "libelous, harassing, abusive, obscene, vulgar, sexually explicit or inappropriate with respect to race, gender, sexuality, ethnicity or other intrinsic characteristic" or that contain false or misleading statements. So your online terms could indeed prohibit all such reviews.
By the way, a "libelous" review is one that contains a false statement that harms the reputation of a company or person. For example, if you write that "no one at that travel agency speaks English," that sentence could be libelous if it were not true.
If you cannot prohibit negative but nonlibelous online reviews, what can you do to prevent them from hurting your business? I found dozens of articles on how to combat bad reviews, and the best advice seems to be to respond promptly and positively.
While your terms and conditions cannot prohibit bad reviews, it is remarkable how much the law in the U.S. favors online merchants over consumers in so many other ways. For example, as long as you can show that the consumer agreed, you can have clauses such as those requiring that suits be brought only in your home city. Such clauses would be considered unfair and unenforceable in most other countries.