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Law Passed To Protect Customers From Non-Disparagement Clauses And Other Ridiculous Restrictions

from the back-to-bogus-libel-lawsuits-then,-I-guess dept

Sitting on the president’s desk is a bill [PDF] that will finally prevent companies from tying customers up with restrictive contracts at the point of purchase — including forbidding the insertion of non-disparagement clauses. The bill is called the Consumer Review Fairness Act, but it might as well be called the KlearGear Act, after the infamous tech toy also-ran that gained international notoriety after it ran a customer’s credit rating into the ground attempting to collect a $3,500 fee for violating a non-disparagement clause it inserted into its Terms of Use after the customer had already posted her negative review.

There are any number of existing applications for the bill once signed into law. Companies are still including non-disparagement clauses in contracts, despite there being ample evidence all it really does is generate massive amounts of disparagement from parties not bound by the contractual language. It’s basically a pre-emptive federal anti-SLAPP law narrowly focused on protecting consumers from litigious companies who feel the “service” part of “customer service” involves a process server. (That being said, there’s nothing stopping companies from filing bogus libel lawsuits over negative reviews — one of many reasons there needs to be a federal anti-SLAPP statute.)

But that’s not the only thing the law will prevent. The language will also keep companies from placing a bunch of restrictions on customers as a thank you gift for choosing to do business with them. Paul Alan Levy of Public Citizen points to another all-too-frequent abuse of customers this law will address.

Readers of this blog may recall an article that I posted in late September, taking issue with a proposed contract that the local professional soccer team has transmitted to season ticket holders who are in the process of renewing their season tickets for the coming season. My concern that the contract includes language in which fans waive the right to post “in any media any description, account, picture, video, audio or other form of reproduction of any D.C. United game or any surrounding activities.” Regrettably, despite many fans having objected to the proposed contract, to the extent of telling team sales people that they won’t be renewing if signing this contract is required, and even though the team tried to deflect the adverse coverage by saying that its lawyers would be looking at possible changes to the contract language. However, late last week the team sent out the same contract for signature, and told me privately that the lawyers had decided not to make any changes because the language is “industry standard.”

Nothing says “thanks for supporting our team” like “shut up and stop talking about us.” DC United wants to retain strict control of its social media presence, apparently feeling that any “social” aspect should be solely restricted to the official channels. With the new law in place, the ridiculous “industry standard” will no longer be legal. Presumably, this also means it will no longer be the “industry standard.”

Levy points out that the law has received the most attention for its banning of non-disparagement clauses, but it’s also written to address this sort of contractual overreach.

[I]t forbids a form contract that “prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication,” Section 2(b)(1)(A), and defines “covered communication” to include any “ written, oral, or pictorial review, performance assessment of, or other similar analysis of . . . the goods, services, or conduct of a person by an individual who is party to a form contract.” Section 2(a)(2). The DC United contract that forbids fans from posting written descriptions or pictures of a game (that is, a review or performance assessment of the team’s conduct) is squarely within the law’s prohibition.

While companies should take care to protect their intellectual property and reputations, this can all be accomplished without forcing customers to accept ridiculous restraints in exchange for a product or service. Companies may point to such concerns when writing these clauses, but underneath it all, it’s usually just an attempt to control public perception — either by discouraging negative reviews or shutting down social media postings that don’t align with the official company narrative.

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Companies: kleargear

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Comments on “Law Passed To Protect Customers From Non-Disparagement Clauses And Other Ridiculous Restrictions”

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Anonymous Coward says:

Isn’t it possible for the bill to sit on the desk and not be signed? What if it’s delayed during the transition between Presidents, can Trump sign or veto it? Or does it need to make its way back through congress?

I know in Canada, ending the parliament session (Election call for example) kills all bills that haven’t reached royal accent. They need to be re-introduced and work their way through the process from the start again.

Isma'il says:

Re: Re:

Once a bill is submitted to the President for his signature, he has three choices:

1. Sign the bill and it becomes law,
2. Let it sit on his desk and after 10 days, it automatically becomes law (while Congress is in session),
3. Veto the bill and it goes back to Congress for a veto-override vote, reworking and resubmission, or is dropped entirely from Congressional consideration.


John85851 (profile) says:

Give them what they want: sports reports should ignore them

I understand that companies want to “control the message” regarding their property, but why would an organization be so strict that they won’t let people post photos of a game? Do they *not* want photos or clips of the games to go viral and attract more attention?
In that case, give them what they want: no one should post photos or talk about the games. Sports reporters should simply say “The home team played a game and they won. We can’t give you the name of the team or the score or the big plays because the team claims a copyright on all of those.”

Anonymous Coward says:

Re: Give them what they want: sports reports should ignore them

Simplest scenario: Player A trips and falls over Player B and both end up in a funny pose.
Everyone should have seen this coming AGES AGO. Rights-holders (regardless of the rights they hold) are more determined to protect their position than ever before. Doubly so if they’re middle-men.
The current IP craze will most likely wind down as the workforce becomes more automated. Too bad nobody will have the money to buy stuff at that point.

alternatives() says:

And what's the plan for firms that are in the the online review business posting false reviews?

What is a business supposed to do beyond shutting down the review option on platforms like Facebook to avoid negative reviews posted by someone with a vendetta? Steven Binko (http://stevenbinko.com/) is the CEO of Product PR Services LLC (http://www.productprservices.com/) and SEEMS to have used the resources of the Product PR to have people post bad reviews about 1 particular business. To get from “SEEMS” to “and here are the phone calls to mom/dad, the emails/SMS to contractors/friends, payments to the negative reviewers” one would need to file what looks exactly like a SLAPP suit to get discovery of the actual communications to Mom/Dad, contractors, payments made, or perhaps just straight up friends/fans of his past work. (Search terms like binko101/binko102 – twitter/”The Psychic Diaries”/blogtv “The Escape”/IMDB page shows the man has fans beyond the ‘softcore porn’ of Facebook/Instagram.)

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