What Would Consumers Say About Your Company?

On December 14, 2016, President Obama signed into law the Consumer Review Fairness Act. Intended to protect U.S. consumers’ rights to post negative online reviews about a company’s products or services, the law was immediately effective with a 90-day grace period for certain contracts, a window that ends just about… now.

Before you throw your hands in the air, (or throw something across the room) consider what precipitated the law and how it fits into a world where everyone has a microphone, a platform and a desire to voice an opinion.

The open-mic environment of the internet has given rise both to consumers who choose to use online reviews maliciously and to companies that manipulate the process with false and inflated reviews about their brand or products. Opportunistic entrepreneurs have turned the creation of disingenuous reviews into an income stream while others have found their own unique ways to leverage negative comments for financial gain.

None of these problems, however, are the specific issue the Consumer Review Fairness Act is intended to target. Joseph C. Sullivan, a partner in the Atlanta law firm Taylor English Duma, (www.taylorenglish.com/) explains, “The Consumer Review Fairness Act was developed when certain companies sought to avoid the consequences of negative online reviews by having their consumers enter into non-disparagement clauses as a part of the underlying business transaction.”
Effectively, such companies were creating gag orders in the form of non-disparagement clauses. To make matters worse, consumers often unwittingly complied with the gag order with a single click when they accepted a website’s terms and conditions agreement.

Every Compelling Narrative Needs a Hero

The story of John and Jen Palmer of Layton, Utah, has been the go-to example used by nearly every advocate for the Consumer Review Fairness Act. When John’s $20 order of Christmas stocking stuffers for his wife failed to arrive from online retailer KlearGear, Jen emailed the company about the problem. KlearGear responded, stating that the company had cancelled the order as unpaid. After Jen failed to reach anyone at KlearGear by phone, she posted a negative evaluation of them on RipoffReport.com.

Three years later, the Palmers received an email from Legal(at)KlearGear.com stating that Jen had 72 hours to remove the review or face a fine of $3,500.

What rights entitled KlearGear to take this action? Fine print in the company’s online sales and use terms included a non-disparagement clause, prohibiting customers from publicly commenting on their shopping experience with KlearGear, although John used archived versions of the website to prove that the language was not even present at the time he initiated his purchase.

Unfortunately, the Palmer’s story did not end there. RipoffReport.com rarely removes reviews, and Jen was unable to delete her online comments. KlearGear then reported the unpaid $3,500 fine to a collection agency as a bad debt.

A five-year battle over the situation left the Palmers with a damaged credit rating and difficulty securing financing for much-needed home repairs. Represented by the Public Citizen Litigation Group, a consumer rights advocacy group, the Palmers took their case to court. In 2014, a U.S. District Court awarded the couple $306,750 in punitive and compensatory damages and $47,596 in attorney’s fees and expenses. The Palmers have since returned to court in hopes of collecting this money from KlearGear, which is now under new ownership, based outside the U.S.

Who Watches the Watch Dog?

While KlearGear is still in business, online search results for the brand are awash in negativity. A Google search of the company’s name even shows the Wikipedia entry for Palmer v. Kleargear.com ahead of its branded domain. But what about the other company that played a role in the Palmer’s story, the website on which Jen Palmer posted her critical review of KlearGear?

RipoffReport.com is a privately owned, for-profit company that has an “F” rating with the Better Business Bureau. As of December 2016, the BBB has fifteen reviews about the company on file; four positive and nine scathing, along with 51 filed complaints.

Ripoff Report’s business model is simple. Any person can anonymously complain about a company or business professional. The company or individual maligned can then post a free rebuttal or can pay for “private independent and neutral arbitrators” (contracted by Ripoff Report), to review the complaint and post their findings.

Search the word “timeshare” on the Ripoff Report website and you will find over 3,000 entries that specifically complain about resort developers, sales staff, management companies, resellers, brokers or title transfer companies. Even the vacation ownership industry’s professional organizations, ARDA and C.A.R.E., are called out by name in grievances.

Ripoff Report is only one of numerous consumer review websites that draws its own share of adverse commentary. YELP and TripAdvisor, along with Foursquare, are the three online platforms dedicated to consumer reviews that garner the most global traffic. Although YELP.com is not rated by the BBB, the agency has more than 1,550 negative complaints on file regarding YELP.

TripAdvisor, LLC, holds a B minus rating with the BBB, but has 105 complaints and zero positive reviews. Even the Better Business Bureau itself has been the subject of significant criticism. In a well-publicized 2010 ABC News investigation, as well as more recent inquiries by CNN Money, BBB offices have been accused of trading good ratings for paid membership dues.

A Potential Mine Field of Challenges for the Vacation Ownership Industry

Inasmuch as the spirit of the Consumer Review Fairness Act seeks to prevent the type of injustice the Palmers faced, other complications of the online review process are still in play, including some that can be especially problematic in the vacation ownership industry. Beset by a mishmash of regulations that have historically varied from state to state and sometimes county to county, the timeshare industry has long battled misperceptions and misunderstandings, along with cads and crooks who found ways to move within the gaps created by the confusion.

Joe Sullivan is recognized for his expertise in advising businesses on how to deal with negative online reviews. He reminds companies in the resort industry that if they utilize non-disparagement clauses, they should immediately meet with an attorney to discuss their obligations in moving forward. Joe says, “The law does not shield reviews that are clearly false or misleading, defamatory, obscene or invade personal privacy. Rather, it merely targets blanket contractual language that prevents customers from publishing genuine negative comments.

“The terms of the Consumer Review Fairness Act void any provision of a contract that prohibits or restricts individuals from posting authentic written, oral or pictorial reviews about the goods, services or conduct of a company and prohibits the use of certain clauses in form contracts that restrict the ability of a consumer to communicate regarding the goods or services offered in interstate commerce that were the subject of the contract, and for other purposes.

“Most importantly to remember,” says Joe, “The new law subjects violating companies to civil actions from the Federal Trade Commission (FTC) or state attorneys general. That said, all companies should ensure they are in compliance after its passage.”

Adjust your Game Plan and Keep Moving

The Consumer Review Fairness Act does not address most of the problems of the online review process, but it does effectively eliminate non-disparagement clauses. Gag orders imposed on the customers who support a business might sometimes worked in the short term but they are not healthy for the hospitality sector or any other reputable industry over the long haul. In the end, this new law means organizations must adjust their game plans …and move on.