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Consumer Review Fairness Act Prohibits Anti-Review Clauses

Posted by James Juo | Mar 03, 2023 | 0 Comments

The Consumer Review Fairness Act (“CRFA”), enacted by Congress in 2016, states that “[i]t shall be unlawful for a person to offer a form contract containing a provision” that “prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication.” 15 U.S.C. § 45b(b)(1) and 15 U.S.C. § 45b(c).

The CRFA prevents businesses from trying to contractually restrict their customers from posting negative reviews. Professor Goldman calls such provisions “anti-review clauses.”

In State v. Ideal Horizon Benefits, LLC, No. 3:23-cv-00046-DCLC-JEM, 2023 WL 2299570 (E.D. Tenn. Feb. 28, 2023), Solar Titan, a vendor of solar installations, was sued by Tennessee and Kentucky over its marketing practices such as allegedly overclaiming buyers' eligibility for tax credits. In addition, these states also alleged that State Titan violated the CRFA.

Solar Titan's standard form contract included the following provision to restrain customers from making negative statements about Solar Titan on social media (a “non-disparagement provision”):

Buyer agrees not to use any form of social media to express their opinion that could be portrayed as negative in the eyes of the public towards or about Ideal Horizon Benefits. Breaching acceptance of this clause by buyer can and will deem monetary compensation benefits to Ideal Horizon Benefits, LLC/Solar Titan USA.

The Court found that this provision clearly prohibits or restricts the ability of a Solar Titan customer to engage in a covered communication in violation of the CRFA.

The defendants conceded that the inclusion of this provision was unlawful but argued that they had outside counsel review and approve their contracts; and only later learned it was impermissible from the Kentucky Attorney General's Office. The Court was unmoved.

The CRFA is clear that offering a form contract with the proscribed provision is “treated as a violation of a rule defining an unfair or deceptive act or practice prescribed under section 18(a)(1)(B) of the Federal Trade Commission Act[.]” 15 U.S.C. § 45b(d)(1). The relief available in a civil enforcement action for such a violation “may include, but shall not be limited to, recission or reformation of contracts, the refund of money or return of property, the payment of damages, and public notification respective the rule violation or the unfair or deceptive act or practice[.]” 15 U.S.C. § 57b(b) (emphasis added). Thus, although not required, contract recission and refund are available remedies for the violation and Plaintiffs are likely to succeed on the merits of this claim against Solar Titan.

The Court granted a preliminary injunction prohibiting Solar Titan from a number of activities including “[a]sserting that the sales agreement provided to the consumer contains a legally enforceable term preventing the consumer from posting a negative review about Solar Titan online.”

According to Professor Goldman, the CRFA had reversed the then-growing trend of “anti-review clauses” by businesses. “As a result, we don't see CRFA cases very often.”

Thomas P. Howard, LLC litigates nationwide including in Colorado.

About the Author

James Juo

James Juo is an experienced intellectual property attorney. He has successfully litigated various intellectual property disputes involving patents, trademarks, copyrights, and trade secrets. He also has counseled clients on the scope and validity of patent and trademark rights.


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