Online Non-disparagement Clauses Targeted by the FTC

The Federal Trade Commission recently filed a complaint against Roca Labs, Inc. and related entities and individuals alleging various violations of the FTC Act, including the use of non-disparagement provisions in its website Terms and Conditions, which was intended to prevent Roca’s customers from sharing their negative experiences with it’s products.

The FTC considers the aggressive use of non-disparagement provisions to be unfair to consumers’ rights to share truthful comments concerning their user experiences.  In it’s complaint, the FTC accused Roca of aggressively suing or threatening to sue customers who shared their negative experiences online based on the non-disparagement clauses.  The FTAC compared the non-disparagement clauses as being the equivalent of “gag clauses” because Roca would not only use the provisions to threaten to sue their customers, but also relied on the provisions to claim that customers who posted negative reviews would owe the full price of the weight-loss products, which often would amount to hundreds of dollars more than the price advertised and actually paid.

The FTC action follows the trend set by the State of California, which already prohibits non-disparagement clauses in consumer contracts, as detailed in a previous post. 

Given the current regulatory climate, every company that does business online should consult with an experienced business attorney to implement and maintain compliant marketing practices and procedures, including proper website terms and conditions.