You may recall that last September, California enacted the nation's first ban on non-disparagement clauses in consumer contracts — that is, clauses prohibiting consumers from criticizing (however truthfully) companies they do business with.
Today, Representatives Darrell Issa, Eric Swalwell, Blake Farenthold, and Brad Sherman (two Democrats and two Republicans) jointly proposed in Congress the Consumer Review Freedom Act of 2015, which would ban non-disparagement clauses nationally. We at Public Citizen have litigated cases against the use of such clauses (for instance in the KlearGear case, as well as the Cox case). The proposed bill, which is similar to one introduced last session (by Democrats only), also prohibits a business from imposing a clause requiring consumers to sign away their intellectual property rights in communications about the business. We've challenged that type of clause, too. Today's bill authorizes enforcement by the Justice Department and by state attorneys general.
Here's our statement on the bill.
Rep. Issa's press release (soon to be available on his website) mentions KlearGear and notes that organizations supporting the bill include (in addition to Public Citizen) Public Participation Project, Yelp, TripAdvisor, Angie’s List, National Consumer Law Center, and Consumer Federation of America.
Here's the bill's text.
That’s great. Unfortunately, it seems like as long as mandatory arbitration clauses are allowed, these kinds of laws will be limited in their power. Require the customer pay the cost of arbitration, and require disputes about the enforceability of both the arbitration clause and the non-disparagement clause to be decided by an arbitrator. Consumers will have to pay an arbitrator to get the company off their backs. If company sets the non-disparagement cost below the cost of arbitration, they will win every time.