Oregon DOJ Targets Customer Review Restrictions

By Drew L. Eyman and Clifford S. Davidson

On October 20, 2026, the Oregon Department of Justice (“DOJ”) filed a complaint in federal court against a Pacific Northwest residential contractor for allegedly suppressing negative customer reviews while promoting positive ones (the “Complaint”). State of Oregon ex rel. Rayfield v. SFW Construction LLC and Somerset Hills Construction LLC, No. 3:26-cv-02296 (D. Or.). The Complaint alleges violations of the federal Consumer Review Fairness Act, 15 U.S.C. § 45b (“CRFA”), and Oregon’s Unlawful Trade Practices Act, ORS 646.605-646.656 (“UTPA”). Businesses that use standard consumer contracts or advertise customer reviews should take note: settlement practices, not just website content, may attract scrutiny.

The CRFA Claim: Can You Gag a Ghost?

The CRFA prohibits businesses from offering standardized contracts containing provisions that prohibit or penalize honest reviews — commonly referred to as “Gag Clauses.” The law applies to “Form Contracts”: Standardized contracts imposed on individuals without a meaningful opportunity to negotiate the terms. Gag Clauses in Form Contracts are void from inception.

The Complaint alleges that defendants’ “boilerplate contract” (the “Contract”) contains a Gag Clause in violation of the CRFA. The alleged Gag Clause is a dispute resolution provision, which states: “Any privately mediated settlement will include a nondisclosure agreement and a nondisparagement agreement.” In other words, the alleged Gag Clause does not impose an immediate, blanket ban on negative reviews; rather, it specifies restrictions to be included if a future dispute arises and if the customer enters into a settlement agreement.

That alleged violation is unusual because it treats a requirement to put a nondisparagement term in any future settlement agreement as a present Gag Clause. The typical Gag Clause is entered into preservice and does not depend on contingencies. Of course, here, a dispute might not arise between defendants and their customer and, even if one does, nothing requires the customer to enter into a settlement agreement. No contract term restricts the customer’s ability to post negative reviews of defendants unless both hypotheticals occur. So, the appropriately Halloween-themed question is, can you gag a ghost?

As DOJ seems to see it, the Form Contract already locked in the no-bad-review requirement from the outset. The Complaint alleges that defendants invoked the Contract to tell customers they had already agreed to those terms and successfully demanded removal of previously posted reviews. Under DOJ’s theory, therefore, the question is whether imposing that advance commitment is itself a present Gag Clause. We might be about to find out.

The UTPA Claim: Can Genuine Reviews Still Mislead?

Even if the CRFA claim fails, DOJ could still pursue its separate claim that undisclosed customer review suppression is misleading. The UTPA protects consumers against certain deceptive business practices that ORS 646.608(1) deems unlawful. The Complaint invokes subsection (1)(e), which prohibits misrepresenting the approval, characteristics, or qualities of goods or services.

According to the Complaint, defendants’ website highlights “4.9/5 stars based on 500+ Google reviews” but does not disclose that defendants require negative-review restrictions or removal as a condition of settling customer disputes. DOJ alleges that this omission makes the website’s representations about customer satisfaction misleading.

DOJ does not allege that the positive reviews on defendants’ website are themselves deceptive. The foundation of the UTPA claim is that defendants are showcasing their customer reviews, in the aggregate, in a deceptively positive light. There seemingly would be no UTPA problem, the Complaint suggests, if defendants added a disclosure to their website stating that they restrict consumers “from making any ‘negative comments’ online.” But, based on the allegations, the Contract at issue does not prohibit just “any” negative comment (DOJ’s word); it only prohibits negative comments if a dispute arises and if the customer chooses to enter into a settlement agreement containing that nondisparagement provision. According to the DOJ, that series of hypotheticals renders defendants’ website deceptive in violation of the UTPA.

This case presents two novel statutory issues, the resolution of which may implicate freedom of speech. If your business advertises customer reviews, keep tabs on this case.