CFPB Summary – Bulletin 2022-05: Unfair and Deceptive Acts or Practices That Impede Consumer Reviews
12 CFR Chapter X
The Consumer Financial Protection Bureau (Bureau) is issuing this bulletin to remind regulated entities of the Consumer Review Fairness Act’s (CFRA) requirements and explain how the Bureau intends to exercise its enforcement and supervisory authorities on this issue.
The Bulletin became effective on March 28, 2022 and can be found here.
Numerous studies and surveys have confirmed the importance of online reviews and the Bureau expects them to play an increasing role in helping consumers choose between providers of financial products/services. The Bureau believes this may create an incentive for dishonest market participants to attempt to manipulate the review process. The Bureau notes that consumer reviews can be important to two groups of consumers: consumers who read and rely upon reviews, as well as consumers who take the time to express their viewpoints in these reviews.
The Consumer Review Fair Act (CRFA) was enacted to respond to abuses by companies that restricted consumer reviews. Some businesses that realized the importance of these reviews, sought to avoid negative reviews through provisions of form contracts restricting such reviews. Typically, these provisions would impose monetary or other penalties for publishing negative comments regarding the provider’s products/services.
The CRFA protects a ”covered communication,” which has been defined as “a written, oral, or pictorial review, performance assessment of, or other similar analysis of, including by electronic means, the goods, services, or conduct of a person by an individual who is party to a form contract with respect to which such person is also a party. For simplicity, the bulletin refers to “covered communications” as consumer reviews. The CRFA provides, with limited exceptions, that “a provision of a form contract is void from the inception of such contract” if the provision:
- Prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication (consumer review);
- Imposes a penalty or fee against an individual who is a party to the form contract for engaging in a covered communication (consumer review); or
- Transfers or requires an individual who is a party to the form contract to transfer to any person any intellectual property rights in review or feedback content, with the exception of a non-exclusive license to use the content, that the individual may have in any otherwise lawful covered communication about such person or the goods/services provided by such person.
In addition, the bulletin notes that Section 1031 and 1036 of the Consumer Financial Protection Act (CFPA) prohibit a covered person or service provider from engaging in an “unfair, deceptive, or abusive act or practice” that is “in connection with any transaction with a consumer for a consumer financial product/service or the offering of a consumer financial product/service.” The Bureau specifically notes a number of ways covered persons/service providers could violate this prohibition by interfering with consumer reviews. For example:
- Deceiving consumers who wish to leave consumer reviews, using purported contractual restrictions that are unenforceable
- Unfairly depriving consumers of information using restrictions on consumer reviews
- Deceiving consumers who read consumer reviews about the nature of those reviews
Finally, the Bureau concludes that covered persons/service providers are liable under the CFPA if they deceive consumers using restrictions on consumer reviews that are unenforceable under the Consumer Review Fairness Act, if they unfairly deprive consumers of information by using such restrictions, or if they deceive consumers who read reviews about the nature of those reviews.