CFPB Follows FTC’s Lead On Consumer Online Reviews – Finance and Banking

On March 22, 2022, the Consumer Financial Protection
Bureau announced that it has
issued guidance designed to dissuade financial institutions from
curbing consumers’ rights to post online reviews.
Specifically, the CFPB put the industry on notice that it intends
to rely on the Consumer Financial Protection Act’s prohibition
on unfair, deceptive, and abusive acts or practices, or UDAAPs, to
prevent institutions from using contracts or other marketing
practices to interfere with consumers’ ability to post and
access online reviews, increasing risks associated with how
institutions manage online reviews. The announcement follows
the Federal Trade
Commission’s warning last fall to 700+ companies that
they could face fines for posting misleading online endorsements,
and heavily cites to prior FTC actions as precedent for the policy
statement.

Citing studies showing the importance of online reviews to
increased company revenues, the CFPB’s
bulletin expresses concern about the incentives for
“dishonest market participants” to “manipulate”
the online review process, rather than compete on the value of
their services, which frustrates the competitive marketplace. To
that end, the CFPB identified the following practices that may be
unfair or deceptive:

• Utilizing contractual “gag” clauses to create the
  impression that consumers are restricted in their ability to
  publish an honest review. The CFPB indicates that using such a
  provision is deceptive because it is unenforceable under
  the Consumer Review Fairness
  Act. The CFPB also notes that a qualifier indicating the
  restriction is “subject to applicable law” will be
  insufficient to cure the misrepresentation.




• Pressuring a consumer to remove an already posted negative
  review by invoking unenforceable contractual restrictions.




• Manipulating which reviews are displayed online (e.g.,
  displaying only positive reviews in a context that suggests they
  represent a comprehensive collection of all reviews about the
  company or its products) or posting fake reviews (e.g., by asking
  employees to post reviews without adequate disclosures of their
  relationships to the institution, or by paying third parties to
  post reviews that are materially misleading or that fail to
  disclose that the reviewer was compensated by the
  institution).

What does this mean for you?

In light of the CFPB’s announcement, financial services
providers may want to consider:

• Reviewing consumer agreements to identify language discouraging
  consumers from posting honest reviews.




• Assessing the way company-owned and third-party websites
  display consumer reviews, along with any associated disclosures
  regarding those reviews.




• Reviewing and updating existing marketing or social media
  policies to ensure they prohibit online review manipulation, and
  contain clear guidelines for making adequate disclosures when
  engaging in any sponsorship or other paid arrangements, or in any
  relationship whereby the company provides an incentive or special
  benefit to a reviewer or endorser that would not otherwise be
  obvious to the audience reading the review.

Although this most recent announcement was from the CFPB, the
FTC and state attorneys general have their own authority to
prohibit unfair or deceptive practices – and institutions
should be mindful of the increased litigation and enforcement risks
created by the announcement. (For more information, refer to the
FTC’s principal guidance
applicable to the collection and use of reviews, endorsements, and
testimonials.)

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.