Senate Considers Banning Online 'Gag' Clauses

Consumer advocates and companies that operate review sites are backing a proposed bill that aims to protect people's right to criticize businesses.

"Having federal legislation in place to help preserve the free speech rights of American consumers will go a long way to ensuring deep-pocketed bullies are unable to quiet their critics," Public Knowledge, the Electronic Frontier Foundation, Yelp, Glassdoor and others say in a letter sent to lawmakers this week.

The bipartisan Consumer Review Freedom Act (S. 2044) would prohibit businesses from requiring consumers to sign standardized contracts that restrict their ability to post reviews. The bill also contains a provision that would prohibit companies from attempting to squelch a review by asserting a copyright interest in it.



"So-called 'non-disparagement,' or 'gag,' clauses are being forced on consumers and then being used to intimidate them," Commerce Committee Chairman John Thune (R-South Dakota), who introduced the bill, stated on Wednesday at a Commerce Committee hearing about the measure.

"These gag provisions are egregious from a consumer protection standpoint, but they’re also doing harm to our Internet ecosystem... What good is information if it’s been sanitized to remove truthful criticism?"

Lawmakers are taking up this issue at a time when non-disparagement clauses are increasingly in the news. In September, the Federal Trade Commission alleged in a lawsuit that the Sarasota, Florida-based Roca Labs engaged in an unfair practice by including non-disparagement clauses in its terms of service.

The agency takes the position that prohibiting purchasers publishing honest reviews already violates consumer protection laws.

But it's not yet clear whether judges throughout the country will agree with the FTC's stance. The lawsuit against Roca Labs marks the first time that the FTC has alleged that requiring people to sign non-disparagement clauses is an unfair business practice.

A federal judge recently entered a preliminary injunction that bans Roca Labs from continuing to use those types of clauses, but that order isn't final. It also only applies to Roca Labs, and doesn't affect other companies that seek to restrict reviews by consumers.

Last year, lawmakers in California outlawed non-disparagement clauses. In New York, a state court judge in 2003 required Network Associates (now McAfee) to remove a terms of service clause that required consumers to obtain permission from the company to publish reviews.

Public Knowledge, Yelp and other supporters of the law said this week that federal legislation is still needed, so that people don't have to "rely on a patchwork of state laws that do not equally protect the free speech rights of all Americans."

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