CFPB Issues Guidance on the Manipulation and Suppression of Consumer Reviews

Earlier this week, the Consumer Financial Protection Bureau issued new guidance to financial companies regarding the manipulation and suppression of consumer reviews.  In a statement announcing the action, CFPB Director Rohit Chopra said, "In America, no corporation should be able to silence a customer from posting an honest review online.  Corporate disinformation campaigns that suppress legitimate reviews or manufacture fake reviews are not only a threat to free speech and fair competition, they are also illegal.”  

Even though Chopra is no longer at the Federal Trade Commission, in his new post at the CFPB, he's continuing to focus on consumer reviews, which have long been a key area of focus at the FTC.  Similar to the FTC Act, the Consumer Financial Protection Act prohibits "unfair, deceptive, or abusive," acts or practices, though the CFPB's jurisdiction is limited to practices in connection with "any transaction with a consumer for a consumer financial product or service, or the offering of a consumer financial product or service." 

In the CFPB's new guidance, the CFPB lays out the types of review-related practices that the agency believes would violate the Consumer Financial Protection Act.  What are the CFPB's specific concerns? 

Noting that Congress enacted the Consumer Review Fairness Act in 2016 in order to greatly limit companies' ability to prohibit consumers from posting negative reviews, the CFPB said that including provisions in form contracts that prohibit consumers from posting negative reviews also violates the Consumer Financial Protection Act.  The CFPB wrote, "enforcing the deception prohibition is particularly important in this context, given that consumer reviews are a significant driver of competition in the modern economy." 

The CFPB also said that manipulating "consumers' comprehension of the set of reviews that are available" also violates the Consumer Financial Protection Act.  Citing the FTC's Sunday Riley action (where the FTC alleged that the company posted fake reviews and "disliked" negative reviews posted by real consumers) and its Fashion Nova action (where the FTC alleged that the company suppressed the posting of negative reviews), the CFPB said that it "intends to carefully scrutinize whether covered persons or service providers are skewing consumers’ understanding of consumer reviews in a manner that is deceptive (or unfair or abusive)."

While the CFPB isn't really articulating any new principles here (and while the guidance doesn't promulgate any rules that are independently enforceable), it is significant that the CFPB is signalling that it plans to focus on review practices as part of its oversight of financial companies.  It's also interesting to see how Director Chopra is focused not only on companies that prohibit the use of negative reviews and those that post fake reviews, but the way in which companies' use of consumer reviews, as a whole, may be deceptive, unfair, or abusive.