Obama Signs Pro-Consumer ‘Yelp Law’

Washington, D.C.--Last week, President Barack Obama signed the Consumer Review Fairness Act of 2016 into law.

According to the White House’s website, the act “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.”

The bill, which is known as the “Yelp Law,” was introduced by a bi-partisan group in April this year to the U.S. House of Representatives, where it passed in September before passing in the Senate on Nov. 28.

Essentially, the act makes it illegal for companies to place gag orders into their contracts prohibiting consumers from leaving negative reviews on websites like Yelp or TripAdvisor.

Currently, the gag orders allow companies to sue negative reviewers. But in light of the act being signed into law, the Federal Trade Commission now can take action against any business that attempts to do so.

Back in September when the bill passed in the House, Representative Leopard Lance (R-NJ) told Fortune, “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.”

The past couple of years have seen various occasions in which consumers were handed lawsuits that could result in monetary damages after leaving negative reviews.

Yelp Director of Public Policy Laurent Crenshaw told Engadget, “One of our top priorities has always been to protect the ability for internet users--everyone from Yelpers to online shoppers--to share their experiences online, whether they be positive or negative. The Consumer Review Fairness Act gives Americans nationwide new guaranteed legal protections when it comes to sharing these honest, first-hand experiences. We will continue to advocate at both the federal and state levels for legislation to protect consumers.”

The new legislation, however, does not impede the right of a business to take civil action for defamation, libel or slander.

For instance, the case last year in which a jeweler sued an anonymous reviewer for libel, wouldn’t have been impacted by the act.

To read the Consumer Review Fairness Act of 2016 in its entirety, visit Congress.gov.