Confidentiality Clauses in Settlement Agreements After the Consumer Review Fairness Act

Authors

Wayne BarnesFollow

Document Type

Article

Publication Date

7-2023

Journal Title

Florida State University Law Review

ISSN

0096-3070

Abstract

Online commerce has skyrocketed in recent years, and shoppers are purchasing goods or services online in greater numbers every year. The COVID-19 pandemic has only hastened the trend. One significant aspect of online shopping is the presence of consumer reviews posted by prior purchasers of goods or services, describing their experience with the products, the services and/or the selling merchant. A vast majority of online shoppers say that they rely on these reviews to help inform their purchasing decisions. Positive reviews can be tremendously beneficial to a business’ profitability, whereas negative reviews can be equally detrimental. Users of the internet can tend to be unrestrained and vitriolic online, due to the online disinhibition effect—and this is no less the case in the world of online reviews. Therefore, businesses have every incentive to seek to minimize the damage that these negative, sometimes even “troll-like,” reviews can inflict on them. Although some businesses sought for a time to include provisions in their form purchase contracts, entered into at the inception of the transactional relationship, that precluded consumers from posting reviews (non-disparagement clauses, or confidentiality provisions), Congress put an end to the practice with the Consumer Review Fairness Act (CRFA) (along with some states). However, although the CRFA now prohibits merchants from banning consumer reviews in their initial form purchase contracts, this Article asserts that the CRFA should not be read to limit merchants’ ability to include a non-disparagement or confidentiality clause in a settlement agreement whose purpose is to fully and finally resolve any dispute between the consumer and the merchant. The text of the CRFA only applies to form contracts entered into “in the course of selling goods or services,” and this does not apply to settlement agreements. Moreover, important rationales exist for distinguishing between initial form purchase contracts, and settlement agreements: (1) allowing confidentiality agreements encourages settlement, which is highly favored, (2) confidentiality and non-disparagement provisions are broadly used and enforced in the settlement context more generally, (3) important differences in context and general enforceability of limitations exist between the initial form purchase contract and the settlement agreement, and (4) merchants should be allowed to include, within a resolution of all disputes, a provision that addresses their concern that a disgruntled customer may evade the spirit of full resolution by inflicting post-settlement damage in the form of a negative review.

First Page

469

Last Page

512

Num Pages

44

Volume Number

50

Issue Number

3

Publisher

Florida State University College of Law

Recommended Citation

Wayne Barnes, Confidentiality Clauses in Settlement Agreements After the Consumer Review Fairness Act, 50 Fla. St. U. L. Rev. 469 (2023).
Available at: https://scholarship.law.tamu.edu/facscholar/1922

File Type

PDF