On May 8, 2019, the Federal Trade Commission (FTC) announced its first three cases that exclusively enforce the Consumer Review Fairness Act (CRFA).  Enacted in December 2016 to protect consumers’ ability to share their honest reviews, the CRFA prohibits companies from using form contracts that bar consumers from writing negative reviews or threaten them with legal action if they do.

According to the FTC’s administrative complaints, each of the three companies—an HVAC and electrical contractor, a flooring seller, and a horseback trail riding operator—unlawfully used non-disparagement clauses in customer contracts.

The three proposed consent orders include provisions designed to ensure future CRFA compliance.  In addition to barring the companies from using non-disparagement clauses in form contracts for goods and services, the proposed orders require the companies to notify consumers who signed the unlawful contracts that the non-disparagement provisions are not enforceable and that those customers can publish their honest reviews, even if negative.

The FTC will publish a description of the consent agreements in the Federal Register and solicit public comments for thirty days.  After reviewing the public comments, the Commission will decide whether to make the proposed consent orders final.

These most recent actions build upon the FTC’s prior cases challenging non-disparagement clauses.  We are carefully monitoring the FTC’s approach to this important consumer protection area and will keep readers apprised on Inside Privacy.

Photo of Laura Kim Laura Kim

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim…

Laura Kim draws upon her experience in senior positions at the Federal Trade Commission to advise clients across industries on complex advertising, privacy, and data security matters. She provides practical compliance advice and represents clients in FTC and State AG investigations. Ms. Kim advises on a wide range of consumer protection issues, including green claims, influencers, native advertising, claim substantiation, Made in USA claims, children’s privacy, subscription auto-renewal marketing, and other digital advertising matters. In addition, Ms. Kim actively practices before the NAD, including recent successful resolution of matters for both challengers and advertisers. She co-chairs Covington’s Advertising and Consumer Protection Practice Group and participates in the firm’s Internet of Things Initiative.

Ms. Kim re-joined Covington after a twelve-year tenure at the FTC, where she served as Assistant Director in two divisions of the Bureau of Consumer Protection, as well as Chief of Staff in the Bureau of Consumer Protection and Attorney Advisor to former Chairman William E. Kovacic. She worked on key FTC Rules and Guides such as the Green Guides, Jewelry Guides, and the Telemarketing Sales Rule. She supervised these and other rule making proceedings and oversaw dozens of the Commission’s investigations and enforcement actions involving compliance with these rules. Ms. Kim also supervised compliance monitoring for companies under federal court or Commission order.

Ms. Kim also served as Deputy Chief Enforcement Officer at the U.S. Department of Education, where she helped establish a new Enforcement Office within Federal Student Aid. In this role, she managed investigations of higher education institutions and oversaw issuance of fines and adverse actions for institutions in violation of federal student aid regulations. Ms. Kim also supervised the borrower defense to repayment division and the Clery campus safety and security division.