The bill was introduced in 2014 and had already been approved by the House of Representatives. It now only awaits President Barack Obama’s signature to become law. During a hearing of non-disparagement clauses in 2015, the Senate Commerce Committee heard from a consumer who was victimized by a gag clause. Ars Technica reported the committee heard “testimony from Jen Palmer, a plaintiff in Palmer v. KlearGear, where a company demanded the removal of a negative online review or payment of $3,500 in fines because the online merchant’s terms of service included a non-disparagement clause. When the review was not taken down, the company reported the unpaid $3,500 to a credit reporting agency as an outstanding debt, which negatively impacted the Palmers’ credit.”
In that case, Palmer won and Kleargear was ordered to pay $306,750, although it is not clear whether the money was ever paid to Palmer and her husband. Other cases heard by the Senate committee, according to Ars Technica, included supplement company Ubervita threatening Amazon customers leaving poor reviews with legal action and Boston-based Pageo Jewelers suing a Yelp reviewer for a one-star review.
Under the new bill, terms that disparage, restrict, or penalize poor customer reviews will be void. Any company that attempts to restrict customers or punish them for reviews will be subject to Federal Trade Commission enforcement of the law, with potential penalties.
The bipartisan support for the act was praised by both parties. “By ending gag clauses, this legislation supports consumer rights and the integrity of critical feedback about products and services sold online,” said Commerce Committee Chairman John Thune (R-S.D.).
“Reviews on where to shop, eat, or stay on websites like Yelp or TripAdvisor help consumers make informed choices about where to spend their money,” said Sen. Brian Schatz (D-Hawaii). “Every consumer has the right to share their honest experiences and opinions of any business without the fear of legal retaliation, and the passage of our bill brings us one step closer to protecting that right.”
