Commission claims real estate contracts tried to mum consumers
And You Thought the Beat Slowed Down?
In a story from about a month ago, we wrote that the Federal Trade Commission (FTC) was ramping up its Consumer Review Fairness Act (CRFA) enforcement.
This week's CRFA spotlight features two new FTC enforcement actions, this time united by a theme: real estate.
First, a primer for the uninitiated: The CRFA, passed into law in 2016, prohibits businesses from using contract fine print to threaten consumers with legal action for negative reviews online.
Caseload
First up are Staffordshire Property Management and its owner, Aaron Fischer, which together operate a property management service and process consumer rental applications.
The FTC alleges that Staffordshire's contracts contained anti-disparagement provisions and agreements that bound the consumer "not to communicate, publish, characterize, publicize or disseminate, in any manner, any terms, conditions, opinions and communications related to Staffordshire Property Management, this application, or the application process."
Here All Week!
The second case is against Robert Aaron Stephens and the company he manages, Shore To Please Vacations (STPV).
STPV rents vacation properties to traveling guests, and the FTC claims STPV's forms read in part as follows: "you agree not to defame or leave negative reviews (includes any review or comment deemed to be negative by a Shore to Please Vacations LLC officer or member, as well as any review less than a '5 star' or 'absolute best' rating) about this property and/or business in any print form or on any website..."
The folks at STPV are also accused of adding this to their contracts: "Due to the difficulty in ascertaining an actual amount of damages in situations like this, breaching this clause...will immediately result in minimum liquidated damages of $25,000 paid by you..."
The Takeaway
So, the FTC's CRFA actions show no signs of abating. If you have any questions or concerns about what you're asking your customers to do in your contract language, be sure to review the FTC's handy reference page, which explains the most important points of the Act. The settlement between the FTC and these two property management companies requires the companies to agree to not use these similar anti-disparagement provisions in the future and requires the companies and their owners to notify the affected consumers that these anti-disparagement clauses are void.
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