FTC Continues Enforcement Of Unfair And Deceptive Online Activities

Author:Mr Dotan Hammer
Profession:Pearl Cohen Zedek Latzer Baratz

The U.S. Federal Trade Commission (FTC) has issued two administrative complaints and proposed settlements enforcing the U.S. federal Consumer Review Fairness Act (CRFA), against two companies that had included "non-disparagement" clauses in their consumer contracts, restricting consumers from posting negative reviews online. The CRFA prohibits non-disparagement provisions in consumer form contracts, which are standardized terms used in selling or leasing goods or services, and that are imposed on an individual without a meaningful opportunity for the individual to negotiate the contracts' terms.

The proposed settlements ban the companies from prohibiting, restricting or penalizing consumer reviews from consumers to the companies, require the companies to proactively notify affected consumers that the challenged contract provisions are void and that they have the right to post honest reviews online. For one of the companies, the settlement also requires it to dismiss with prejudice a pending lawsuit alleging that a consumer violated its non-disparagement agreement.

The FTC also reached a settlement with a background screening company over allegations it falsely claimed to be a participant in the EU-U.S., Privacy Shield program. The Privacy Shield program establishes processes to allow companies to transfer consumer data from European Union countries to the United States in compliance with EU law. The...

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