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What the FTC Does About Review Prohibitions and How Home Improvement Companies Can Avoid Problems

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Posted On: November 26, 2019

We’ve covered the huge no-no of review gating in the past from the perspective of how much you don’t want to experience Google’s ban hammer. But did you know that trying to keep people from leaving negative reviews about your company can also get you in hot water with the Federal Trade Commission?

The Consumer Review Fairness Act
The CRFA was enacted in 2016, and it protects the rights of all consumers to share legitimate feedback and criticisms regarding businesses. Legally, you cannot impede someone’s ability to this right via contractual means, issuing penalties or asking consumers to give up intellectual rights when they pen a review.

For example, home improvement businesses can’t put any wording in a service contract that prohibits someone from sharing a negative review or complaint about the company in the future.

Action From the FTC
The FTC has already settled with numerous companies who were violating the CRFA. If you’re thinking you’re out of the spotlight because you’re a small or midsize home improvement business, think again. Some of the businesses that settled with the FTC include a flooring firm and an HVAC company.

While the FTC didn’t impose monetary fines this time around, it left the door open for those types of penalties in the future. However, it did require the businesses to agree to avoid prohibitions in the future and to contact all clients who signed an agreement that included the bans on negative feedback. The FTC provided the verbiage companies had to use, which explained that prohibitions on complaints or negative reviews were invalid.

If you don’t see the major downside to this penalty, consider this. Consumers who may have moved on from less-than-satisfactory outcomes will now be reminded of their complaint and the fact that they have a legal right to do something about it.

How to Avoid the Issue
In past FTC cases, businesses crossed the line by including language in service agreements that prohibited consumers from filing complaints with the Better Business Bureau, disparaging the company publicly or making any negative written or verbal statements about the business.

Avoid this issue by not addressing the issue of consumer reviews in any contracts or imposing penalties (such as a poorer price point) on consumers who do leave negative reviews.

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