Senate Committee OKs Bill Barring Companies From Using “Gag Clauses” To Block Negative Reviews

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A bill that would enact a nationwide ban on the use of tricky “non-disparagement” or “gag” clauses to prevent consumers from providing their honest opinions in public forums is one step closer to becoming a law today, after the Senate Commerce Committee voted to approve the Consumer Review Freedom Act.

We’ve been writing about these clauses for years. Most notoriously, there was the ultimately doomed attempt by online retailer KlearGear to squeeze a customer for a $3,500 penalty after she wrote a truthful but negative review of the company online. That case became so notorious that the customer actually testified before the Commerce Committee earlier this month about her ordeal.

From cheapo cellphone accessories, to wedding contractors, to apartment complexes, the use of these clauses has only grown more popular as companies — especially small businesses and independent contractors — learn to cope with the fact that customers might say unpleasant but honest things about their experiences.

Many courts have found that these clauses are legally unenforceable, and California recently banned their use in the state, but there is no overriding legal consensus on the issue and no federal law dealing with it.

After a few false starts, the latest version of the Act [PDF] passed swimmingly through the Commerce Committee. It helped that it was introduced by committee chair Sen. John Thune of South Dakota and received bipartisan support among the other committee members.

“Reviews offering blunt and honest criticism play an increasingly important role in helping customers select the best products and services,” said Thune. “The Consumer Review Freedom Act is needed so consumers can benefit from the experiences of others through the open exchange of information.”

Today’s news was welcomed by our colleagues at Consumers Union.

“This important consumer rights legislation would give the Federal Trade Commission and state attorneys general authority to turn the tables and take enforcement action against businesses that attempt to use these clauses against consumers,” said George Slover, senior policy counsel at Consumers Union. “Congress should pass this bill to protect the rights of consumers to speak their honest opinion about the products and services they purchase, and about how they are treated by the businesses they deal with — and to protect the ability of independent testers and reviewers to provide objective, unbiased and reliable information to consumers about the safety and performance of products and services.”

by Chris Morran via Consumerist