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Client Alert: The Do’s and Don’ts of Online Customer Reviews

If you operate a mobile app or any other online platform that features consumer reviews, there are important rules you need to know when it comes to procuring, organizing, or editing consumer reviews of your products or services.

The risks are real.  Any actions you take that have the effect of distorting or misrepresenting consumer reviews may give rise to allegations of potentially deceptive conduct and enforcement actions by the Federal Trade Commission (“FTC”) under Section 5 of the FTC Act.

As a matter of general guidelines, a few key principles emerge from Section 5 of the FTC Act.  Namely, companies (1) should be transparent about their review-related practices and (2) should treat consumer reviews in a way that truly reflects the feedback received from legitimate customers, presenting a true and holistic picture of the consumers’ experiences and interactions with the companies’ goods or services.

While these guiding principles may seem straightforward enough, many companies have engaged in practices that are, in fact, illegal. It’s important to know that, if adopted, these practices can give rise to significant liabilities.  This brief article is intended to highlight, and help you avoid, some common pitfalls.

Consumer Review Fairness Act
The Consumer Review Fairness Act (CRFA) protects consumers’ ability to share honest opinions about products or services, and extends this protection to all common review practices, including online reviews, social media posts and feedback, and uploaded or other consumer-generated content, such as feedback, photos, and videos. 

Any contract or contract provision that prohibits, prevents, or otherwise penalizes or punishes (through legal action, fees, or other penalties) negative reviews by customers is a violation of the CRFA.  Even a cursory online search can reveal examples of drafting missteps in various contractual provisions, often found in website terms of use or other business-to-consumer agreements, all of which contain a common misstep—a provision purporting to prohibit negative or critical statements (written or oral) about the business entity’s goods or services.  Following reports that many companies were attempting to prevent consumers from giving honest reviews, including through contractual provisions, Congress passed the CRFA in 2016, in an effort to protect the honest consumer assessments from these somewhat common suppression attempts.

More broadly under the CRFA,  any contract provision imposing any of the following restrictions is illegal: (1) prohibiting or restricting the ability of a consumer to provide reviews, (2) imposing a penalty or a fee against a consumer for providing reviews, and (3) with the exception of a non-exclusive license to use the contents of the consumer reviews, transferring or requiring the consumer to transfer any intellectual property in their reviews or feedback. 

It should be noted that employer-employee or independent contractor agreements are generally exempt from the CRFA. 

To ensure your company is complying with the CRFA, you will want to review any contracts you have with customers, and in particular online terms and conditions.  These agreements should not contain provisions that restrict people from sharing honest reviews, penalize those who do, or claim copyright ownership over such reviews.

Crafting a Transparent Policy of Consumer Review Practices
Whatever your business model may be, it is important to be transparent about your consumer review-related practices.  As you look to articulate those practices, it is important to understand the common mistakes that may arise as part of those policies or in everyday practices within your organization. 

Moderating or suppressing consumer reviews in fact remains permissible under the CRFA and Section 5 of the FTC Act.  Businesses can generally rely upon the following grounds to prohibit or remove certain reviews, provided such practices are applied equally to both negative and positive reviews: (1) reviews containing confidential or private information – for example, financial, medical, or personnel file information, or trade secrets of a business; (2) reviews that are libelous, harassing, abusive, obscene, vulgar, sexually explicit, or inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic; (3) reviews that are unrelated to the company’s products or services; or (4) reviews that are clearly false or misleading.

In recently published proposed updates to the Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”), the FTC provided further clarity as to what it considers to be related or relevant content in consumer reviews.  In addition to direct reviews that cover a company’s products or services, the following are also deemed related to a company’s overall products and services:  customer service, delivery, returns, and exchanges.  More general complaints about a company’s policy positions are, on the other hand, viewed by the FTC as unrelated.  

Crafting and implementing a policy that clearly and conspicuously discloses and manages how your business collects, processes, and display reviews therefore becomes an important communication to your consumers.  In fashioning a policy, keep in mind the following key principles to avoid potentially deceptive conduct that may violate the FTC Act: (1) have reasonable procedures to identify fake or suspicious reviews before and after publication; (2) when the reviewer has a material connection to your business—for example, when the reviewer has received compensation or a free product in exchange for their review, the review was collected as part of a sweepstakes entry form, or the review was submitted by your own staff or employees—that relationship should be clearly and conspicuously disclosed; (3) subject to the limited reasons for suppressing any review, as discussed above, publish all genuine reviews and don’t exclude negative ones, feature them less prominently, or subject negative reviews to greater scrutiny.

Establishing and maintaining your online reputation and visibility are appropriate, and often critical, goals which are primarily accomplished through customer reviews.  Given the wide extent to which both consumers and businesses rely on customer reviews, having appropriate policies concerning the collection, processing, and display of consumer reviews is a critical component of your company’s ability to maintain and nurture consumer trust in your company and its brands.