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Auto Remarketing Article Summary: NADA cautions dealerships about Consumer Review Fairness Act

In the last few months several dealerships have been engaging in questionable conduct by putting clauses in their installment contracts that discourage customers from leaving negative online reviews. This was a clear violation the Consumer Review Fairness Act (CRFA), which is a consumer protection statute banning the use of gag clauses in non-negotiable consumer for contracts.

The National Automobile Dealers Association (NADA) announced that the Federal Trade Commission (FTC) recently came down on five separate businesses that violated CRFA. These businesses were sued on the basis that their contracts barred customers from leaving negative reviews and demanded financial compensation from those whom did. This is the first time that the Federal Trade Commission has enforced the CRFA ever since it was signed into law in late 2016.

The CRFA protects a broad variety of consumer assessments, including your right to share your opinion about a business without negative repercussions. This includes comments, thoughts, reviews, or dislikes on any forum.

In a later blog post the FTC shared more information about the CRFA and how dealerships, and other businesses, can avoid violating it. This post urged businesses to thoroughly review their form contracts. It is best that these form contracts are very clear regarding the CRFA, as any suspicious conduct can be challenged if it blurs the lines. On the same note, the FTC reminded dealerships that the FTC act, which outlaws unfair acts or practices that affect commerce, still applies. Lastly, all dealerships should know that any clause baring reviews is in violation of the CRFA, even if the dealership does not enforce it.

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