Fri, 05 Jun 2020

WASHINGTON, DC - Following a public comment period, the Federal Trade Commission has approved final orders settling charges that five companies violated the Consumer Review Fairness Act (CRFA) by including provisions in form contracts that bar their customers from posting negative reviews.

According to the agency's administrative complaints, the first three of which were announced in May 2019 followed by two more in June 2019, the companies violated the CRFA by using form contracts with non-disparagement provisions that barred consumers from writing or posting negative reviews online or that imposed financial penalties for doing so. The companies and individuals named in the complaints are: 1) A Waldron HVAC, LLC and its owner, Thomas J. Waldron; 2) National Floors Direct, Inc. (NFD); 3) LVTR LLC (LTVR) and its owner, Tomi A. Truax; 4) Shore to Please Vacations LLC; and 5) Staffordshire Property Management, LLC.

Typical of what the companies were alleged to have engaged in, Shore to Please Vacations were asking guests to commit as part of their rental contract, not to write negative reviews. Their contracts included a clause which said: "[b]y signing below, you agree not to defame or leave negative reviews (includes any review or comment deemed to be negative by a Shore to Please Vacations LLC officer or member, as well as any review less than a "5 star" or "absolute best" rating) about this property and/or business in any print form or on any website…."

The final orders settling the FTC's charges bar each company from using such non-disparagement provisions in form contracts for goods and services, and require them to notify consumers who signed such contracts that the prohibited language is not enforceable. The final order against Shore to Please also requires it to dismiss with prejudice a count in a private lawsuit in which the company alleged that a renter violated its non-disparagement agreement. The proposed orders also impose compliance and reporting requirements on the companies.

The Commission vote approving each final consent order, and responses to two public commenters on the National Floors Direct matter, was 5-0.

(Image credit: swns).

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