(WPRI) – The Federal Trade Commission (FTC) has issued administrative complaints against several businesses they say threatened consumers with legal action if they posted negative customer reviews.
The FTC said it discovered illegal gag clauses in contracts at five businesses across the country, including rental companies, and Massachusetts-based flooring company, National Floors Direct.
The Consumer Review Fairness Act of 2016 prohibits companies from including any language in a contract that would prevent consumers from posting negative reviews.
According to the FTC, National Floors Direct had a clause in its contract that said, “by signing this purchase order you are agreeing, under penalty of civil suit… not to publicly disparage or defame national floors direct in any way or through any medium.”
The feds say thousands of consumers in Massachusetts, Rhode Island, and New Hampshire agreed to the company’s terms.
Now in a proposed settlement, National Floors Direct will send a letter or email to all of those customers telling them they can post any type of review they want.
In a statement to Eyewitness News, National Floors Direct said, “At the time this language was added to the purchase order agreement, the Consumer Review Fairness Act was not yet in existence and the language was legal.”
The company added, “At no time did National Floors Direct ever seek to enforce these provisions. As soon as National Floors Direct was made aware of the newly enacted law, the language was immediately removed from its contracts.”
Paula Fleming of The Better Business Bureau called it a win for consumers.
“If you have done business with anyone, you’ve provided money, then it’s your right to have an opinion on that business and voice your opinion,” said Fleming. “Whether it be online or otherwise.”
“People are typically writing customer reviews, positive or negative, from emotion and you want to see is the business responding to those customer reviews,” she added.
National Floors Direct said it agreed to resolve the matter with the FTC “without being required to make payment to the government or any consumer and without admitting liability or wrongdoing in any respect.”