The Senate unanimously approved legislation Monday night that is intended to protect consumers who want to post negative online reviews on Yelp and other websites.
{mosads}The bill, approved by unanimous consent, was sponsored by Commerce, Science, and Transportation Committee Chairman John Thune (R-S.D.) and is backed by Yelp, Angie’s List and TripAdvisor.
The legislation would bar companies from burying gag clauses in their terms of service agreements that discourage customers from posting negative online reviews by threatening fines or legal action.
The bill would give authority to states and to the Federal Trade Commission to take action against the clauses as an unfair or deceptive act or practice. A separate House version of the bill gives enforcement authority to the Justice Department.
“This legislation is very simple. A person should be able to give their honest review of a good or service they purchase online without fear of facing a penalty for their opinion,” Sen. Brian Schatz (D-Hawaii) said. “Online reviews help consumers make better choices and that’s why we must end the practice of unfair non-disparagement clauses.”
The legislation was backed by bipartisan senators in the Commerce Committee and passed out of the panel last month.
Much of the information about gag clauses is anecdotal at this point.
There are no good numbers on what kinds of companies employ them most or the frequency they are being used. Some in the medical and healthcare industry had been encouraged to adopt the clauses in the past but have since moved away from them.
When debating the bill, the committee heard from Jen Palmer, whose credit score dropped after an online retailer fined her for posting a negative review. She successfully sued Kleargear.com, but as of last month had not received damages from the company that the judge awarded.