Proposed Law Would Ban Penalties For Negative Online Reviews

Before the site went down for prolonged “maintenance,” Accessory Outlet included a clause in its Terms of Sale that charged a $250 penalty to complaining customers.

Days after California Governor Jerry Brown signed a new state law outlawing the practice of using non-disparagement clauses to penalize consumers who complain about business transactions, a few members of the U.S. House of Representatives have introduced a similar piece of legislation that would ban this questionable practice in all states.

The Consumer Review Freedom Act [PDF] was introduced this week by Reps. Eric Swalwell and Brad Sherman, both from California. It seeks to “prohibit contracts that prohibit consumers from making certain public comments on businesses.”

The bill covers clauses in contracts or terms of sale that restrict a “person’s written, verbal, or pictorial review, performance assessment of, or other similar analysis of, the products, services, or conduct of a business.”

“No country that values free speech would allow customers to be penalized for writing an honest review,” said Swalwell in a statement on Tuesday. “I introduced this legislation to put a stop to this egregious behavior so people can share honest reviews without fear of litigation.”

The proposed legislation and the California bill are a response to recent incidents in which online retailers have tried to levy fines against customers for violating non-disparagement clauses.

A KlearGear.com customer was recently awarded $306,000 in damages because the online retailer attempted to hit her with a $3,500 fine for allegedly violating the site’s non-disparagement clause, which the customer says she never agreed to, and which was not in the terms of sale linked from the site’s checkout page, but on a separate page on KlearGear.com.

That company appears to have removed the clause from the website.

Last month, an unsatisfied customer of incredibly sketchy e-tailer Accessory Outlet (which also operated under several other names) sued because she was told she had to pay $250 for merely threatening to issue a chargeback through her credit card company. In the case of this seller, customers did not even have to acknowledge that they had read and agreed to the terms of sale.

That site went “down for maintenance” on 8/29 and, as of this morning, has still not re-opened.

by Chris Morran via Consumerist