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The FTC Announces Consumer Review Fairness Act Enforcement Actions

By Laura Kim on May 10, 2019
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On May 8, 2019, the Federal Trade Commission (FTC) announced its first three cases that exclusively enforce the Consumer Review Fairness Act (CRFA).  Enacted in December 2016 to protect consumers’ ability to share their honest reviews, the CRFA prohibits companies from using form contracts that bar consumers from writing negative reviews or threaten them with legal action if they do.

According to the FTC’s administrative complaints, each of the three companies—an HVAC and electrical contractor, a flooring seller, and a horseback trail riding operator—unlawfully used non-disparagement clauses in customer contracts.

The three proposed consent orders include provisions designed to ensure future CRFA compliance.  In addition to barring the companies from using non-disparagement clauses in form contracts for goods and services, the proposed orders require the companies to notify consumers who signed the unlawful contracts that the non-disparagement provisions are not enforceable and that those customers can publish their honest reviews, even if negative.

The FTC will publish a description of the consent agreements in the Federal Register and solicit public comments for thirty days.  After reviewing the public comments, the Commission will decide whether to make the proposed consent orders final.

These most recent actions build upon the FTC’s prior cases challenging non-disparagement clauses.  We are carefully monitoring the FTC’s approach to this important consumer protection area and will keep readers apprised on Inside Privacy.

Photo of Laura Kim Laura Kim

Laura Kim has a proven track record of successfully resolving clients’ most important consumer protection matters before the FTC, State AGs, and the NAD. She is well-known for her insider knowledge of the FTC as well as her practical approach to accomplishing her…

Laura Kim has a proven track record of successfully resolving clients’ most important consumer protection matters before the FTC, State AGs, and the NAD. She is well-known for her insider knowledge of the FTC as well as her practical approach to accomplishing her clients’ objectives.

As chair of Covington’s Advertising & Consumer Protection Investigations practice group, Laura represents corporate and individual clients in investigations before the FTC and State Attorneys General. She also provides pragmatic compliance advice on a wide range of consumer protection issues, including substantiating claims involving generative artificial intelligence, environmental benefits, and “Made in USA.” She counsels brands on emerging issues involving influencers, consumer reviews, AI-generated content, and subscription autorenewals. Laura regularly represents both challengers and advertisers before the NAD, achieving favorable outcomes in matters involving artificial intelligence, influencers, and claim substantiation.

During her twelve-year tenure at the FTC, Laura served as Assistant Director in two divisions of the Bureau of Consumer Protection, Attorney Advisor to Chairman William E. Kovacic, and Chief of Staff to Bureau Director Jessica Rich. She oversaw major rulemakings—including the Green Guides and the Telemarketing Sales Rule—and supervised dozens of investigations and enforcement actions. As Assistant Director in the Division of Enforcement, Laura also supervised compliance monitoring and enforcement proceedings for companies under federal court or Commission order.

Read more about Laura KimEmail
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  • Posted in:
    Privacy and Cybersecurity
  • Blog:
    Inside Privacy
  • Organization:
    Covington & Burling LLP
  • Article: View Original Source

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