Obama signs law protecting negative consumer reviews

Dive Brief:

  • President Obama on Wednesday signed the Consumer Review Fairness Act of 2016, “which makes certain clauses of a form contract void if it prohibits, or restricts, an individual from engaging in a review of a seller's goods, services or conduct,” according to a White House press release.

  • The pro-consumer legislation, which passed both houses of Congress earlier this month, makes it easier for customers to post negative user reviews of retailers, restaurants and other businesses by shielding them from threats of legal action and/or monetary damages arising from negative feedback. Because it’s a regulation of the internet, the Federal Communications Commission, along with states, can take action against businesses that flout the protections.

  • Courts have already taken a dim view of retailer retaliation against negative reviews, but the new law enshrines consumer protections. 


Dive Insight:

New Jersey Congressman Leonard Lance (R-NJ), an original sponsor of the Consumer Review Fairness Act, said in September that the bill is “about protecting consumers posting honest feedback online.”  

“Online reviews and ratings are critical in the 21st Century and consumers should be able to post, comment and tweet their honest and accurate feedback without fear of retribution,” Lance said in a statement. “Too many companies are burying non-disparagement clauses in fine print and going after consumers when they post negative feedback online. That needs to stop.” 

Customer reviews are actually a powerful motivator for both online and in-store purchases, with 95% of shoppers saying they have consulted reviews in the past, according to research from PowerReviews. Reviews fall second to price as the most important consideration when a customer is contemplating a purchase, above free shipping, product brand and even recommendations from friends and family. And 57% of shoppers actually prefer to visit e-commerce sites that offer reviews.

Reviews are so important because they imply transparency, which helps a retailer foster a sense of authenticity and trust among consumers. Beyond the benefits of increased conversion and improved SEO, customer reviews — including the bad ones — offer unique perspectives on the user experience, PowerReviews CEO Matt Moog told Retail Dive last year.

“Negative reviews are essential to building consumer trust,” Moog said. “If all you do is present glowing, positive reviews, it really reduces credibility. We have found that the majority of consumers actually seek out negative reviews as a way of confirming credibility, and also determining that the things in the negative reviews seem relevant.”

That study also found that retail marketers are actually doing a better job than others at winning consumer trust. According to the survey, the majority of shoppers (53%) said that retail sites offer the most trustworthy reviews, while 39% look to media outlets as the most credible.

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