A bill has recently been introduced in the U.S. Senate (S.2044) called the Consumer Review Freedom Act. Its core provision outlaws non-disparagement clauses for online reviews.

What are non-disparagement clauses? Increasingly, businesses are writing into their terms of sale language that prohibits their customers from posting unfavorable reviews about them online, often subjecting them to stiff penalties if they do.

This article was first published on the Infocommerce Group Blog.

There’s a need for this bill as non-disparagement clauses are rapidly getting out of hand. Interestingly, they first took hold in the healthcare profession, where physicians bridled at the notion of mere patients commenting on how they do business. Such clauses also briefly got some traction in the hotel industry, where hotels sought to fight back against the overwhelming power of sites such as TripAdvisor. It’s also been noted that non-disparagement clauses can even be found in the terms of use of more than a few websites. Merely by accessing these websites, you are prohibited from posting negative reviews. You may also be prohibited from making negative comments to friends and neighbors!

While most people see their online reviews as a simple freedom of speech issue, non-disparagement clauses can lead people to worry that perhaps their online reviews are not protected speech. It’s this potential chilling effect that this legislation seeks to end.

I certainly have sympathy for small businesses that have been subjected to unfair, inaccurate and mean-spirited reviews. Yet at the same time, resorting to non-disparagement clauses is a heavy-handed and clumsy response. Moreover, they have incredibly bad optics, something a number of businesses have learned when they tried to enforce this legal language and the dispute got picked up by the media.

This proposed legislation isn’t the last word in terms of the law of online reviews. Further balancing is needed. But as a way to make it clear to consumers that they are free to post their opinions online, it’s a positive development.

Russell Perkins, our INSIDER Guide to Data Publishing Strategy, is the Founder and Managing Director of InfoCommerce Group (ICG). InfoCommerce Group is a boutique consultancy serving the global business information industry, with expertise in commercial data products focused on corporate and product data strategy, new data product development, assessment of existing products to help accelerate growth (or stem declines), and acquisition due diligence. (Read Russell’s full Bio)