Weight loss marketer Roca Labs says it shouldn't face prosecution by the Federal Trade Commission for allegedly trying to prevent consumers from posting bad reviews.
Roca Labs argues in new court papers that there was no federal law prohibiting companies from squelching reviews in 2015, when the FTC filed a complaint against the Sarasota, Florida-based company.
"By jumping the gun and attempting to prosecute defendants for violations of a non-existent law, plaintiff has done nothing but to waste the court's time and taxpayer money on a lost cause," Roca Labs says in a motion filed late last week. The company is asking U.S. District Court Judge Mary Scriven in Tampa, Florida to throw out the FTC's allegation that Roca Labs' use of non-disparagement clauses amounted to an unfair business practice.
The battle dates to September 2015, when the FTC sued Roca Labs. Among other charges, the FTC challenged the company's clauses forbidding bad reviews. The agency says in court papers filed last week that those types of non-disparagement clauses can injure consumers "by limiting the flow of truthful information about their products to consumers and the marketplace."
Roca Labs, which touts its weight-loss products as more effective than gastric bypass surgery, allegedly said in a prior version of its sales terms (sent in package inserts and also available online) that any negative Web reviews would be considered defamatory. The company also told consumers that they would be subject to $100,000 in damages for posting reviews, according to the FTC.
What's more, Roca Labs appears to have followed up on its threats by suing people. While the FTC didn't name any specific cases in its complaint, a search of the federal court's online records showed that Roca Labs was involved in several lawsuits before it was sued by the FTC.
In the 18 months since the FTC first brought suit, other officials turned their attention to the use of non-disparagement clauses. Last year, Congress took aim at attempts to stifle bad reviews by passing the Consumer Review Fairness Act, which outlaws non-disparagement clauses in form contracts.
Roca Labs now contends that it shouldn't be prosecuted for trying to squelch bad reviews before the Consumer Review Fairness Act took effect. "The FTC is asking this court to retroactively apply the new law," the company says in its motion.
Santa Clara University law professor Eric Goldman, a vocal critic of attempts to stifle online reviews, points out a flaw in Roca Labs' argument.
Even though Congress didn't explicitly outlaw non-disparagement clauses until last year, those clauses weren't necessarily legal in the past, Goldman says. On the contrary, he says, at least two states -- New York and California -- had already determined that businesses couldn't legitimately attempt to ban reviews by consumers.
In 2003, former New York Attorney General Eliot Spitzer won an injunction requiring Network Associates (now McAfee) to revise its terms and conditions by removing language requiring consumers to obtain permission to publish reviews. More recently, in 2014 California lawmakers passed a bill that outlaws contractual clauses that restrict people's right to post reviews; that measure specifies that anyone who tries to enforce a non-disparagement clause could face penalties of between $2,500 and $10,000.
Goldman adds that the new federal law means Roca Labs will likely have to stop including gag clauses in its standard terms regardless of the result of the FTC's lawsuit, "Even if Roca Labs can dodge the FTC bullet now, they probably will still have to change their practices," he says.