Businesses Should Review Consumer Contracts to Assure Compliance with the Consumer Review Fairness Act

The internet has greatly expanded the ability of customers to review the products and services offered by businesses and the public availability of such reviews. Not only are there third-party websites where consumers can review all variety of businesses, but some online sellers provide the ability to review products right on the page where the product is offered for sale. In response to contractually penalties imposed on customers for leaving negative reviews, Congress passed the Consumer Review Fairness Act (CRFA). Though it may not be a headline-grabbing law that would force a business to change its conduct dramatically, the CRFA does mandate several serious provisions that motor vehicle dealerships and other businesses should address.

The CRFA invalidates provisions in a form contract that prohibit or restrict an individual from reviewing the product, service, or conduct of the other party to the contract, impose a fee for making a review, or requires the transfer (other than a non-exclusive license) of the individual’s intellectual property rights in the review. A business may not offer a form contract that contains a provision voided by the act. The CRFA may be enforced by the Federal Trade Commission and state attorneys general.

If a motor vehicle dealership needs to change its form contracts to remove clauses in violation of the CRFA, it should do so immediately. While not an FTC requirement, one might want to notify any customers who used the old form contracts that whatever clause in violation of the CRFA has been made void. A notice in the office of such changes, and that the motor vehicle dealership uses CRFA-compliant form contracts is another smart action, albeit one not required by the FTC.

Regardless, it is essential that motor vehicle dealerships and other businesses review their form contracts and ensure their compliance with the CRFA. Considering the legal and financial consequences of being found in violation, not to mention the subsequent bad publicity, suffering some negative reviews would be the least of the dealership’s worries. For compliance purposes, a good rule of thumb is just to let customers speak honestly about the dealership’s products, services, and conduct.