FTC Enforcement Actions Target Illegal Non-Disparagement Clauses

The FTC recently issued orders against three companies, in different industries, enforcing the Consumer Review Fairness Act (CFRA), which prohibits businesses from using illegal non-disparagement clauses in contracts with consumers.

The orders were against a Pennsylvania-based HVAC and electrical provider, a Massachusetts-based flooring firm, and a Nevada-based horseback trail riding operation.  The companies were accused of including clauses in their contracts that barred consumers from writing or posting negative reviews online, and/or threatened legal action if the consumers did so.  Under the orders, the companies are required to notify consumers that the review-limiting contract terms are void and that the consumers have a right to post honest reviews about the companies.  The orders also prohibit the companies from requiring that future customers accept review-limiting contract terms as a condition of the companies’ fulfillment of their obligations under contracts with consumers.  In addition, the orders require the companies to keep records of compliance with the orders for 3 years and to retain such records for at least 5 years.