Consumer Review Freedom Act Sponsor Issa Seeks 'Balancing Act' in Bid To Prevent Gag Clause Enforcement
House supporters of the Consumer Review Freedom Act (HR-2110) are going through a “balancing act” to ensure the bill currently being considered by the House Commerce Committee’s Commerce Subcommittee broadly protects consumers’ right to free speech while also providing the right exceptions for companies, said Rep. Darrell Issa, R-Calif., during a Congressional Internet Caucus Advisory Committee event Friday. Issa introduced HR-2110 in April as the House companion to S-2044, which the Senate passed in December (see 1512150012). If enacted, CRFA would prevent businesses from using “gag clauses” included in terms of service or other contracts with consumers to prevent consumers from posting negative reviews of goods or services online. Stakeholders generally praised HR-2110 and S-2044 at the Friday event.
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Passage of the CRFA is necessary because existing laws don’t contain sufficient legal authority for the FTC or other federal agencies to address gag clauses, Issa said. The FTC has challenged gag clauses as being an unfair practice under Section 5 of the FTC Act, including its September lawsuit against weight-loss supplements marketer Roca Labs for threatening to enforce gag clauses against consumers who posted negative reviews online or complained to the Better Business Bureau, said Carl Settlemyer, senior attorney-Division of Advertising Practices. The FTC hasn’t taken a position on the CRFA, Settlemyer said. Though the FTC’s Section 5 authority may be sufficient in the Roca Labs lawsuit and some other cases, it’s “not accurate for all cases” involving gag clauses, Issa said.
“We want [HR-2110) to be broad enough” so it would require only a summary judgment that a gag clause limits a consumer’s First Amendment rights for a company to be compelled to stop rather than requiring the FTC to take enforcement action, Issa said. Senate Commerce Committee Chairman John Thune, R-S.D., “and I feel strongly” that CRFA needs to be “clear and simple” to prevent lawyers from finding loopholes that could allow gag clauses to continue being used, Issa said. When companies “want a way to gag bad news, that’s where we need to have a broad and sweeping law,” Issa said. CRFA should allow exemptions for “reasonable” situations where a service is based on a consumer’s promise to maintain confidentiality, as in medical testing trials, he said. Issa said he also wants to prevent HR-2110 from becoming a vehicle for an increase in litigation.
Consumers Union Policy Counsel George Slover and several others at the event endorsed CRFA, with Slover saying it “creates the right boundaries” to prevent gag clauses and would effectively nullify companies from enforcing such clauses “from the get-go.” TripAdvisor Senior Counsel Brad Young said the bill would be a nationwide solution to the gag clause issue that would “cut off litigation really early,” perhaps even before a company begins threatening enforcement. Santa Clara University High Tech Law Institute Director Eric Goldman praised CRFA for making it “tricky for even the most clever claims lawyer to come up with a way around” the bill’s provisions.
Both Goldman and Slover urged further consideration of the Securing Participation, Engagement and Knowledge Freedom by Reducing Egregious Efforts Act (HR-2304) and other legislation to prevent strategic lawsuits against public participation (SLAPPs) against online reviewers in conjunction with CRFA. Although HR-2304 as currently written has “some scoping problems” that require revisions, anti-SLAPP legislation “needs to be given a closer look,” Slover said.