Bill Outlawing Online 'Gag' Clauses Advances In Senate

The Senate Commerce Committee on Wednesday approved a bill aimed at protecting people's right to post online reviews.

The bipartisan Consumer Review Freedom Act (S. 2044) would prohibit businesses from demanding that consumers sign standardized contracts that restrict their ability to post reviews.

The measure also aims to prohibit companies from squelching criticism by asserting a copyright interest in reviews. That technique that was popular with health care professionals earlier this decade, but the company pioneering the strategy, Medical Justice, retreated in 2011 when faced with litigation.

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The measure was approved by voice vote, according to The Hill. The lawmakers' move comes two weeks after a hearing at which Commerce Committee Chairman Sen. John Thune (R-S.D.), who introduced the bill, condemned online "gag" clauses as "egregious from a consumer protection standpoint."

Numerous advocacy groups say they support the measure, as do review sites like Yelp.

The version approved by the Commerce Committee differs from the initial proposal, but only slightly. One change flagged by Santa Clara University law professor Eric Goldman, who testified in favor of the law, is that the bill now gives state authorities greater leeway to enforce the law. Specifically, the new version eliminates a provision that would have prohibited state officials from enlisting outside lawyers to prosecute cases on a contingency fee basis -- meaning that the payment would be tied to the result of the lawsuit.

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.

The Federal Trade Commission also recently weighed in against non-disparagement clauses. In September, the agency alleged that the Sarasota, Florida-based Roca Labs engaged in an unfair practice by including a gag clause in its terms of service.

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.

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