Senate Passes Bill Banning Non-Disparagement Clauses

from the silencing-the-silencers dept

Tue, Dec 15th 2015 2:04pm — Tim Cushing

Despite it being transparently obvious that non-disparagement clauses hidden in fine print serve the singular purpose of deterring complaints about bad products and services, companies still deploy them with little fear of retribution. To date, only one state has actually banned the use of non-disparagement clauses: California.

The issue appears to have finally reached the critical mass needed to propel it onto the national legislative radar. Back in May, multiple representatives started pushing for a federal ban on these clauses, prompted in part by the high-profile KlearGear debacle, in which a couple had their credit rating ruined by the online retailer in its pursuit of a BS $3,500 fee tied to its (nonexistent at the time of the negative review) non-disparagement clause.

The Senate's version of this bill -- which also forbids companies from requiring customers to sign over IP rights to their reviews (so they can be targeted with bogus DMCA takedown notices) -- has cleared another significant hurdle, as The Consumerist reports.

A nationwide ban on the use of tricky “non-disparagement” or “gag” clauses — which prevent consumers from providing their honest opinions in public forums — cleared the Senate today, bringing it one major step closer to becoming law.

If passed by the full Congress, the Consumer Review Freedom Act [PDF] would give the Federal Trade Commission and state attorneys general the authority to take enforcement action against businesses that attempt to these ethically questionable clauses to quiet consumers.

The House version hasn't moved forward since May. The Senate's passage of a nearly identical bill should prompt some action from this side of Congress. Both bills would seem to have enough support to make this a reality.

If passed, the new law would authorize the Federal Trade Commission to take action against companies deploying non-disparagement clauses. Unfortunately, the Senate version does not authorize $16,000/day fines for violating the law like the House version does, instead limiting the FTC's actions to civil proceedings. But either way, a ban at the federal level would give shady American companies no place to hide.

Crfa-Amended (PDF)Crfa-Amended (Text)

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Filed Under: feedback, free speech, gag clause, non-disparagement clauses, reviews, senate

11 Comments

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Anonymous Coward, 15 Dec 2015 @ 2:15pm

Banning "gag" clauses is just lube
.. for the screw job on personal privacy.
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Capt. ICE Enforcer, 15 Dec 2015 @ 2:47pm

Clause
I am sure after it passes they will make an amendment which will destroy all freedoms and mandate that we must obey our overlords. Along with give all our property to big corporations.
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Anonymous Coward, 15 Dec 2015 @ 3:25pm

is posting benchmarking results considered "disparagement"?
Nuance software, which sells Dragon NaturallySpeaking -- sold here in the Techdirt shopping store -- has a clause in its EULA that prohibits users from benchmarking the software and 'publishing' the results. Would this kind of ban on benchmarking be considered an "non-disparagement clause"? Has Nuance sued or threatened anyone for posting benchmark results? And is this sort of draconian restriction of a user's free-speech rights common in the software industry?

https://www.techdirt.com/articles/20151214/09394433072/daily-deal-dragon-pc-mac.shtml
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G Thompson (profile), 15 Dec 2015 @ 4:12pm

Well this is a start to Consumer laws that the rest of the Planet (EU, Aust/NZ, etc) has had for over 30yrs or more [1975 was when Australia got our first major consumer laws].

Soon if you are all mature enough you might get to the stage where things like:

* Reasonable for life of product warranties are statutory (ie: Washing machines/Refrigerators have 10yrs or more life)
* If something is not fit for use or as advertised the consumer (not the seller) gets the choice of Refund, Repair, or Replacement [ and for serious faults this extends to life of statutory warranties]
* everything goods and services are covered. That includes cars, Houses, and other MAJOR purchases.
* Corporations can not in any way shape or form be defamed.
* Mandatory and Binding arbitration is an instantly voidable term in any contract for goods and/or services [though Business to business contracts ONLY have some binding arbitration ability still]
* Anyone can compare one product to another no matter what a EULA can state.

It will take time, but maybe in the far distant future (probably another 30yrs) you too will have all the above.
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Coyne Tibbets (profile), 15 Dec 2015 @ 6:14pm

Prediction
Here's predicting the law is found unconstitutional on First Amendment grounds. Corporate lawyers are experts at twisting constitutional law to support their clients' needs and don't care who else's Rights get trampled.

Expect the first challenge before the ink of the President's signature is dry.
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Anonymous Coward, 15 Dec 2015 @ 6:23pm

Economic theory
For an efficient marketplace buyers must have reliable, truthfull information. A vendor lieing about their product or preventing potential customers finding second opinions distorts the (imaginary) "free market".
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That One Guy (profile), 15 Dec 2015 @ 8:30pm

Re: Prediction
While I don't doubt for a second that you're right and it will be challenged, that would take some insane twisting, and/or a string of particularly stupid judges to buy the idea that this is a First Amendment violation, given gag-clauses are aimed at stopping other people from speaking, rather than enabling any speech.
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Anonymous Coward, 15 Dec 2015 @ 9:01pm

Re: is posting benchmarking results considered "disparagement"?
From the bill:

The term "covered communication" means a written, oral, or pictoral review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party.

So, I think a term prohibiting benchmarking would be be prohibited by this. What is benchmarking if not a performance assessment?

And by the way...

It shall be unlawful for a person to offer or enter into a form contract containing a provision described as void in subsection (b).

Yikes. Better read those terms and conditions, because it's not just unlawful for them to offer such a term, it's unlawful for you to accept it!
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annonymouse, 16 Dec 2015 @ 6:12am

The simple but impossible for most
When it comes to major purchases you have to sign a contract.
Most do not either know or are too afraid to remove clauses from such documents before signing.
I still remember the almost apoplectic look on the car salesmans face as I boxed, crossed, intialled and dated every section I was unhappy with. He insisted that I could not do that and I insisted that I could go to another dealership and forward the contract to the manufacturer. ... the second statement made him very amiable.
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Coyne Tibbets (profile), 16 Dec 2015 @ 2:41pm

Re: Re: Prediction
...and we've never seen anything like that in the court's recently, have we?

Nothing like the ruling allowing companies to force every lawsuit into company-leaning arbitration, for example.
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Wendy Cockcroft, 17 Dec 2015 @ 7:50am

Re: Economic theory
As does the Golden Rule: he who has the gold makes the rules. As in, it's hard to get your money back once you've paid it out so how are you supposed to vote with your wallet?

In an actually free market neither side would have an advantage over the other, you'd just have people trading on an open, voluntary basis.

In practice we are forever being told by free market advocates to either accept the situation or vote with our wallets by taking our business elsewhere if we're not happy. "Screw consumers" is not a philosophy I'll ever agree with.
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