WASHINGTON (MEDIA GENERAL) – Yelp users posting brutally honest reviews have high-placed allies in the U.S. Senate.
“What good is information if it’s been sanitized” by powerful companies, asked Sen. John Thune (R-S.D.) indignantly in a highly-anticipated Senate meeting Wednesday.
Thune, the powerful chairman of the Senate Commerce Committee, accused companies of “unfair bullying” for using so-called “gag clauses,” which threaten customers with heavy fines for posting negative online reviews, even if they’re factual.
He outlined cases of financial penalties levied on unsuspecting consumers. For instance, a dentist charging patients $100 per day if they posted less-than-admiring reviews, and a hotel requiring guests to fork over $500 per negative online post.
Sens. Jerry Moran (R-Kan.) and Brian Schatz (D-Hawaii) joined the South Dakota Republican in sponsoring the Consumer Review Freedom Act of 2015.
They invited Jen Palmer of Utah to share her story of a costly, protracted legal battle with online company KlearGear.com due to a gag clause.
Ms. Palmer recalled her husband ordering $20 in Christmas presents on KlearGear several years ago. When the items didn’t show up, PayPal canceled the order and refunded their money. After the hassle, Jen Palmer posted a review in an online forum warning others of their headache.
Three years later, KlearGear notified the Palmers that they violated the company’s terms of service – including its non-disparagement clause – and fined them $3500. Refusing to bow to KlearGear’s tactics, Jen Palmer says the couple’s credit was ruined by non-payment notices, leading to denied car loans, unsuccessful credit card applications, and inability to secure funds to replace a broken furnace.
Palmer told senators in the month that followed her broken furnace, she wrapped her son in blankets to fight near-freezing temperatures, hoping family and friends wouldn’t find out and report them to social services.
Only after receiving legal aid was the Utah family able to fight the company in court and force it to remove its credit-impacting penalty.
Sen. Claire McCaskill (D-Mo.) asked Ms. Palmer if KlearGear – which has not compensated the family for time or legal costs – is still in business. When Palmer confirmed the online company continues to operate despite avoiding payment, McCaskill fumed, “Ugh, that just drives me crazy!”
“I think Ms. Palmer would’ve run in horror” had she known companies packed contracts with such riders, McCaskill opined.
Sen. Moran agreed, saying in the past, businesses were held accountable in a real and immediate way. For instance, in his Kansas town, Moran says residents would share colorful reviews of car dealers and bargain ratings, “after church, at the grocery store, in cafes.”
The bill has wide bipartisan support in the Commerce Committee. Sen. Richard Blumethal (D-Conn.), a prominent advocate of consumer rights, decried the “tricks and traps” hidden in companies’ contracts. The committee’s ranking member Sen. Bill Nelson (D-Florida) vocally supported the bill because, as he says, “Companies want to muzzle consumers … It’s just another way for companies to avoid accountability.”
The panel also heard from TripAdvisor’s senior vice president Adam Medros, who told senators that some travel companies “bully or intimidate reviewers” and “consumers usually have no idea they’re signing up for such agreements.”
The Consumer Review Freedom Act includes a carve-out, allowing businesses to sue reviewers for posting content that is untrue or defamatory.
Sen. Deb Fischer (R-Neb.) questioned the bill’s ability to protect small businesses, which depend on sterling reputations to stay above water. Chairman Thune reassured the committee that businesses, small and large, will retain their full rights to battle maliciously inaccurate reviews in court.
Closing out the meeting, Sen. Thune congratulated Ms. Palmer for proving that “one person really can make a difference.”
The mother, who now lives in Oregon with her husband and son, jokingly awarded the committee meeting a five-star review and said, “to have 99.999% of the Internet behind you is humbling.”
Groups representing Angie’s List, Yelp and others sent letters in support of the legislation.
The Consumer Review Fairness Act is expected to face a full committee mark-up – and vote – in the coming weeks, and then head to the full Senate. It does have a companion bill sponsored by Rep. Darrell Issa (R-Cal.) currently moving through the House.