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tv   U.S. Senate  CSPAN  November 6, 2015 10:00am-12:01pm EST

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prime minister. correia, taiwan -- korea, taiwan, philippines, indonesia, india and so forth. my interpretation of that is that people in a very large country don't know the candidate for stancu don't know anybody that does. so they're trying to assess character, it helps if you know the family. on the other hand, vis-à-vis jeb bush, back in '80s when his father was when for president i went down to midland, texas, and drove by, odessa, go buy the houses the bushes had lived in. i got the addresses. and the nicest was a little modest little ranch house. the idea that three presidents of the future presidency of the united states were living there in the 1950s somehow strikes me as really weird. and that's, i think that's a problem. obviously, if the republicans were to nominate jeb bush, they
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forfeit the idea that you can campaign against hillary clinton as old stuff, remembrance of the past and where the future. and i don't think, you know, i used as a jeb bush was the best conservative government in america in the last 10 years. now i've got to extend it to 20 years, which suggests his problem. >> we will be back in february at a what you think the team and for all of you coming. it's been a great session. thanks. [applause] [inaudible conversations]
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[inaudible conversations] [inaudible conversations] [inaudible conversations]
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[inaudible conversations] >> finishing up his aei preview of the 2016 elections and if you missed any of it will be available shortly to watch anytime online at the presidential candidates may have reaction to today's announcement that unemployment dipped to 5.5% and then that is the lowest since april 2008. jason from who chairs the council of economic advisers issued a statement saying the economy added two under 71,000 jobs in october marking the strongest three years of job creation since 2000. he says he praises other positive signals but he summarizes by saying there's
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more work to do to extend these positive trends including increasing investment in infrastructure, implement high standards free trade agreements and raising the minimum wage. you can read the full report on the unemployment situation on our website we will be back at aei later for discussion on the criminal justice system and prison reform your a pair of former prisoners will take part in the program that starts live at noon eastern right here on c-span2. elsewhere, it's a look at health care costs across the country.
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>> the senate commerce committee heard testimony about consumer reviews and gag orders. at a short tactics used by companies to monetarily penalize
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consumers believe bad reviews and the legality of those maneuvers. from earlier this week this is just over one hour and 40 minutes. good morning. a single come to order today we convened to examine echoing a disturbing trend affecting consumers in the united states. imagine you're a consumer who purchases an item online, but the product isn't what you bargained for. because you don't want other consumers to waste their time or money, you take to social media to post an honest account of your experience. you're then aggressively approached by the company that sold you the substandard product and threatened with a stiff penalty unless you immediately take down the critical review. little did you know that buried in the fine print of the website's terms and conditions was an anti-consumer clause forbidding you from posting a negative review about the company, even if it's true. this scenario sounds far-fetched, but the sad reality is that it's happening every day across the country. so-called non-disparagement, or gag, clauses are being forced on consumers and then being used to intimidate them. these gag provisions are egregious from a consumer
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protection standpoint, but they're also doing harm to our internet ecosystem. our committee spends a significant amount of time focusing on how we can increase broadband adoption and create policies that unlock the true potential of the internet, but speech-stifling contract terms undermine what we're trying to accomplish in internet policy. a core tenet of the internet is the ability to freely share information with whomever you like. what good is information if it's been sanitized to remove truthful criticism? simply put, imposing consumer gag clauses can result in unfair bullying. the practice is frequently about a larger entity abusing its power and insulating itself from legitimate and constructive criticism. often consumers don't believe they have any power against companies that treat them poorly, but online review sites and social media have given american consumers a tremendous amount of power. consumers rightfully place high value on the experiences of other consumers and therefore frequently rely on the wisdom of the crowd when deciding where to spend their money. do some consumers sometimes
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abuse the internet with false reviews? sure they do. but businesses that face unfair reviews have existing remedies available to them, including the ability to sue for defamation. in addition, businesses should be able to offset phony reviews with positive assessments from satisfied customers. regrettably, there are a growing number of businesses in the marketplace that are blocking honest consumer speech through gag clauses rather than responding to negative criticism by providing a better product or service. today we are joined by jen palmer, who will share her personal experience fighting against an unscrupulous company that sought a $3,500 penalty simply because she told the truth about poor customer service. fortunately for the palmers, they were able to challenge this abuse in court and persevered. the palmers are far from alone in their experience. in one case, a dentist included a non-disparagement clause in her contract, as well as a clause that purported to grant the dentist the copyright to anything the patient may later write about the dentist. when a patient posted an online review complaining about being
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overcharged, the dentist sent a takedown notice to the review site. the dentist also sent the patient a series of invoices demanding payment of $100 for each day the complaints continued to appear online. the patient sued the dentist and a court found the clause to be unconscionable and void, awarding the patient nearly $5,000. in another case, a consumer who did not receive her order from an online retailer informed the company she would report the matter to her credit card company. in response, the company demanded the consumer pay $250 for violation of its fine-print terms of sale, which prohibited a customer from even threatening to make a negative public statement about the retailer. the consumer filed suit against the retailer alleging its actions were unfair, deceptive, and contrary to public policy. the court ultimately found in the consumer's favor. going even a step further, in a wedding contract, one hotel went so far as to inform prospective newlyweds they could be fined if they or any of their guests violated a gag clause by leaving a negative review.
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after this clause was reported widely in the press, the business changed its terms. keep in mind, the vast majority of non-disparagement clauses never see public light. this is because consumers often succumb to pressure and remove the negative review. understandably, they'd rather avoid the fight than face the threat of excessive penalties, costly litigation, or damage to their credit scores. the proliferation of this problem led senators moran, schatz, blumenthal, mccaskill and me to introduce the bipartisan and bicameral consumer review freedom act that would ban non-disparagement clauses in form contracts while still permitting companies to pursue good faith defamation claims. our bill empowers the federal trade commission and state attorneys general to enforce against these anti-consumer provisions. the ftc recently filed suit against one company over a consumer gag clause and the consumer review freedom act would guarantee the commission's ability to fight against these provisions. since introduction we've worked with stakeholders and plan to make a few changes prior to marking up the bill.
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i'm looking forward to moving this pro-consumer legislation through our committee and the senate so americans can continue to help each other make informed decisions. we have an excellent panel here today with diverse experiences on this issue. you each bring a unique perspective and i look forward to hearing about your experiences and thoughts on our legislation. thank you for agreeing to testify. senator nelson? >> thank you, mr. chairman. so companies want to muzzle consumers, and these companies are using their size and unequal bargaining power to force consumers to sign fees take it or leave it agreements or contracts. in some cases these agreements are just online pop-up items that a consumer? on, usually without reading all the small print to purchase a
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good or a service on the internet. almost no one reads them, but they can have major consequences. now, when i was in law school they call these contracts of adhesion. they are called aviation guess you were stuck with them -- adhesion. you can't modify the contract in any way. you are bound by the fine print that lawyers are so good at drafting. and the idea that some companies are suing, or threatening to sue, their customers for truthfully reviewing their consumer experiences online, and saying it's ok, because of these so-called non-disparagement clauses snuck into contracts in
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the fine print, i think it's appalling. so we need to do something about it. and thankfully, mr. chairman, you are. in a state like mine, florida, that is so dependent on tourism, we want visitors to share their experiences. businesses that do a good job should be rewarded with good comments, and those who do not, they ought to be punished by telling the truth. so, mr. chairman, unclad voucher bill would stop this practice by voiding contracts application that punish consumers for sharing their experiences and opinions with other consumers. now, i think his hearing is timely, mr. chairman, because this issue and your bill, it brings up also, in my mind, related issue that needs to be
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discussed. just a few weeks ago, the los angeles times reported that fiat chrysler was requiring consumers who wanted to receive a friends and family discount on a car to , they must, in order to get that, sign a mandatory arbitration clause as part of the sales contract. so if the car is defective and kills or injures that consumer as was the case with toyota's sudden acceleration, gm's faulty ignition switches, and takata's airbags, then you're potentially barred from seeking relief. this type of provision is outrageous, and i think it's obvious. and beyond the automakers themselves, many dealers are
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also trying to use these arbitration provisions to shield themselves. so this committee has seen too many examples lately of companies giving away scott free for killing and injuring and hiding the truth. and these non-disparagement and arbitration clauses are just another way for companies to avoid accountability by silencing consumers. so yes, consumers ought to be able to write a negative review about their business experience but consumers should also have the ability to seek justice in a court of law when businesses fail to hold up their end of the bargain. especially if that failure ends up in injury or death. we just simply can't let people continue to get off scot free.
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so thank you, mr. chairman. thank you for the hearing. >> thank you, senator nelson for those comments. i do want to for the record just add a couple of letters of support for the legislation. this one is from angie hicks of angie's list in which she says the bipartisan consumer review freedom act would bring with the use of these clauses, agreements and waivers which are blamed the often cleverly disguised effort to strip americans of the rights to discuss their express. the internet association says we applaud today's hearing. on the bipartisan bill introduced as i mentioned by several of our colleagues. the american consumer institute center for citizen research, the institute for liberty also a letter of support. and then one as well from another coalition that includes yelp public knowledge, public participation project, real self among many others. i want to enter those for the
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record and i want to open it up and look forward to hearing from our panel today. we have with us, beginning on my left, mr. adam medros was the senior vice president for global product at tripadvisor. mr. robert atkinson who is at the present of information technology and innovation foundation. is jen palmer who i mentioned is the one, is one of the named plaintiffs in palmer v. kleargear. mr. eric goldman is professor santa clara university law and is also the direct of the school's high tech law institute. and then finally mr. ira rheingold who is executive director of the national association of consumer advocates. so welcome to all of you. great to have you here today. we will start on my left and you're right with mr. medros. please proceed with your statement and conflict of close to five minutes as possible and we'll get him some questions from the panel. >> good morning, chairman thune, ranking member nelson, chairman thune, ranking member nelson and numbers of the commerce
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committee. thank you for inviting me to testify in today's doing of what we believe is a very important topic. i'm encouraged by the committees attention to this issue and appreciate your recent introduction of the consumer review freedom act. i'm head of global product of advisor the world will largest website. for those who don't recall what it's lik like to plant about the trip prior to the advent of the internet, let's rewind 15 years. making travel purchases because of a significant cause the frequent nature of travel and divorce we place on vacations was a risky proposition. he either had to research and plan the trip on your own, calling multiple hotels and airlines, or rely on a travel agent look at pressures filled with marketing language and stage photographs. if you're lucky maybe friend had visited that country before it you were buying blind. the internet drastically from that experience for consumers. with access to millions of customer reviews, we are no
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longer constrained to what i found efforts perch or what was local travel agents think you should stay on vacation. american consumers can make informed decisions about how to spend their hard earned money. most businesses have come to embrace this shift, a minority of holdouts refuse to let consumers share experiences. a popular tactic is to use their contractual language, leverage to silence their critics. this underhanded practice harms those writing reviews at the seeking transparency to others expenses and those businesses that are playing by the rules. tripadvisor host more than 2,050,000,000 reviews from our community covering more than 5 million businesses all over the world. tripadvisor encourages our members to share reviews and opinions and their experiences at hotels, restaurants and attractions. we believe in the right to do so. we give all this is the right to respond. in order to ensure consumers are
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present with both sides of the story. as you tripadvisor far from a source of consumer reviews. americans are returning to websites like amazon, yelp, angie's list to educate themselves on everything from what doctor to visit to whom they should hir hard to remodele kitchen. a recent study revealed 70% of all american shoppers lot on online reviews before making a purchase. justice united kingdom competition and market authority found 54% of uk adults were light upon online reviews and 70% of photoshop was consider online reviews to be more important than other sources. no matter what population has been research into consumer reviews had become a part of today's marketplace. for consumer use have become so ubiquitous that many americans will make a significant buying decision without researching those opinions we know some businesses don't like the ken spence online reviews are brought to the were. some intimidate consumers as a means to get reviews remove renr
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to stop them from being submitted. other seek to simplify hiding small print in contracts, stipulating any negative review will it have a fine or sign the property in review to the business. consumers have no idea their sign up for such agreements which are only provide a small print at the moment of chicken or purchased any those who read these clauses like a leveraged of the nonnegotiable clause is removed while staying at the check-in desk with a family and a well-earned vacation hanging in the balance. while the intention is always the same, namely to gag any negative opinions, exactly which can vary. examples include since bad reviews are detrimental to our business we place a fine for unwarranted reduced under the terms o of property. encounter receives a poor review and is out of context or control of how to measure and define will be charged on a credit card on file. dealing with companies and individuals that try to include
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these clauses integrated can be tricky for a platform like tripadvisor. while the easiest solution would be to supplement the business listing for website, that is what the company wants to eliminate the ability for consumers to comment. it would be a disservice. tripadvisor has taken the approach of occiio red stags box warning travelers of this unscrewed with behavior. this isn't a perfect solution and one which would be improved upon a passage of the act. placing a muscle does is everything we stand for a tripadvisor. as a consumer can tell family and friends about her experience with the business and the off-line world, jazz right to share that experience and opinion online allowing businesses and customers to learn and benefit. when it is this includes a gag order, anyone is harmed. the consumer is less informed than otherwise would be about quality of service or lack thereof and a given business, even the business doing the silencing is harmed as a loses
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the opportunity to learn from its customers. these types of clauses serve no positive role in the american market place and stand i in the way consumer transfers. in conclusion, trying to tripadvisor looks for to working with you at the committee to ensure american consumers are not prevented from sharing opinions and experiences with other potential customers, whether in person or via the inner. i welcome your questions on this important topic. >> mr. atkinson? >> thank you, chairman thune and treachery and members of the committee. i appreciate the opportunity to come before you today to talk about the impact of non-disparagement clauses on consumers and the economy. the information technology and innovation foundation has long focused on policies to enable the internet economy to thrive. in this particular area you are addressing with a consumer review freedom act is a critical one if that is going to be our goal. i want to raise three issues today. the first one being about
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economic theory and economics behind this. there's long been a give and economics that the functioning effective function of markets depends upon information. in fact, economics received the nobel prize in 2001 for the research led her to what they called asymmetric information to this is exactly what is going on here when you go to a hotel, you don't know anything about the hotel other than what you see. the hotel knows everything. this is a marked with asymmetric information. they won that prize because they showed markets with asymmetric information underperformed what would otherwise be economic welfare for everyone, consumers and the overall economy. and in particular this and other economic research has found that markets don't perform effectively, number one, if buyers can actually assess the value of the product or service before they buy it. go to a hotel and have no idea
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what's going on, you can't make an informed decision. second and eighth in incentives exist for the seller to pass off as a quality product or service as high quality one, clearly as the examples have shown, that exists certainly for some sellers. third, where the sellers of good products and services have a hard time proving their quality. and forth, which is a deficiency of public or the assurances. in other words, where it's hard for consumer to find some independent assessments of quality. that is wanted on the emergence of online rating tools are so important. big essential as a tool to solve this long old age old problem that has bedeviled economic markets. and online rating system solves the problem because they provide a public quality assurance of that and to let people know when there is poor quality. that second point is the issue about preemption. i know some argue that the
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federal government should not be involved in some of these questions and we should just let the states do with these questions and their better position. certainly on many issues in many cases states are best positioned. but in general when it comes to the internet economy, we can't rely on states to set policies for two big reasons. one is that you end up with at the café at different and conflicting policies between states and the second reason is that the academy. in many of these cases tripadvisor, hotel reviews in florida many of those are non-florida residents. so state may say we want to protect our businesses by not allowing this. but they are hurting consumers all around the country because consumers everywhere use of these and contribute to these. i think it is a very clear justification for federal acti action. the third would be, well, what about the possible harms to this is why there is a bad review? i think it's been pointed out
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already that this bill would not prohibit companies from already using existing legal tools for defamation. but more importantly there's been a lot of evidence now that we cite in our testimony that even when a company receives a bad review, if the company manager, whoever that may be, affirmatively respond to that of the region and says we are sorry, or thanks for the review, we will try to fix that problem, it turns out that gets the better results with consumers because consumers believe that the manager or the company is taking consumer complaints seriously. so they're more likely to trust this. this was a study recently about hotels and found that regardless of whether we choose are good, neutral or negative, they begin to receive high ratings from guests at the hotel managers started to respond to feedback. i've heard that from hotel
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managers when we've done some study on hotels. to actively go out now and tell the managers that they should respond online because it brings back trust. so i don't think we should worry too much about the impact on companies. if companies are smart what they will do is they will affirmatively monitor these rating platforms and in response appropriate. where there are clear cases of defamation and outright lies, again, they can have other legal means. so in summary that's why i support this legislation and believe it's important for the online marketplace. thank you. >> thank you, mr. atkinson. next up is ms. palmer. >> chairman thune, ranking member nelson and members of the committee thank you for inviting me to testify today. my name is jim palmer. on the family's ordeal with the blink of an attractive honestly negative review demonstrates why not a special clauses should be prohibited. in december 2008 my husband placed an order on online
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merchant kleargear for a couple of small trinkets that came to less than $20 per when he either failed to arrive with both attempted to contact the company through phone and e-mail. and we never get human being on the phone to e-mail response claim the order was never paid for and was canceled. frustrated at the shoddy customer service i posted a review on kleargear then we moved on with our lives. then in may 2012 john gotti e-mail from kleargear demanded my review be removed within 72 hours of we've defined $3500 for violating the non-to special clause in their terms of sale and use. this clause which barred customers from quote taking any action that negative impacts, its reputation, products, services, management or employees did not exist when john ordered the items and the fact that john didn't write the review didn't matter. researching the archives confirmed the cost of not appear until february 2012, 3 years
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after my review had been posted. .. repeated theirposition and admitting thed confirmed the debt but we couldn't afford to hire an attorney and didn't know how to fix the credit report without help. it would be more than 18 months before the credit would be clean again. we have been careful to live within our means using financing
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only for large purchases like our cars in 2008 and 2011, our house in 2009 and medical bills that were not covered by three of the no problems getting financing for any of those but for a year and a half, the black mark on jobs credit caused constant anxiety, fear and humiliation when people would ask us. because of the credit problems were denied a credit credit card, and he laid a car loan and detoured from trying to buy a home that would move us closer to the workplaces. the worst came when we were denied emergency financing to replace a broken furnace in october of 2013. we were desperate grabbing our then 3-year-old son and blankets every night with temperatures dropped to near freezing. i was terrified too scared to tell anyone for fear social services would take him away from us because we have no heat. we had to cut every expense that that month and between our paychecks that meant we were able to buy a basic furnace with cash. by that point we were tired of living in anxiety and fear.
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i contacted a reporter in salt lake city who did a segment on us and got us in contact with a nonprofit organization public citizen which represented us in the suing klear gear. they helped clear or credit and after bullying us for so long, klear gear never bothered to show up to defend themselves in court. throughout our entire ordeal he only wanted two things come of it all traces of klear gear actions against us were cleared from his credit and to do everything we could to ensure nobody else ever had to have to experience the nightmare that we endured. we want congress to ban the clauses and we applaud the committee for addressing the problem by giving the federal trade commission and the authority the power to go after companies that use them. we are the only victims of this type of contact of public is public citizen has recorded several times on their website. they do not have the power to restrict speech or publish people who criticize. it needs to stop.
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companies should earn their reputation honestly with good products and services and fair dealing. we think states should be free to enforce the law in every way they can. i was glad to share the restriction barring the offices from hiding outside attorneys could be removed. i'm grateful for the opportunity to share my experience with you. on behalf of my husband john, my son come in all the consumers out there who were being bullied silenced by companies with one disparagement clauses i urge you to pass a bill that prohibits to provide robust enforcement of the law. thank you. >> thank you for your willingness to share that story with us today. professor goldman. >> mr. chairman, ranking member nelson and members of the committee i appreciate the opportunity to discuss the consumer review freedom act of 2015 and how congress can help protect consumer reviews. i commend the committee and bill
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sponsors for their leadership on this topic. consumer reviews are probably important to the modern economy to become stronger and more efficient when consumers share marketplace experiences and guide other consumers to the best vendors and away from poor ones. despite the social benefits generated by consumer reviews, some businesses try to distort the public reputation by contract really suppressing reviews from customers. these efforts are categorically illegitimate. the consumer review ensures every opportunity voice to the discourse so that other consumers can benefit from their experiences. because contractual restrictions on consumer reviews are such a terrible idea, it seems like existing laws should already prohibit the practice. although there is precedent to support the position, also explore two reasons why i think we still need to consumer review freedom mac. first, it's not clear if courts will enforce anti-review clauses. and i use the term anti-review clauses to describe other people
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are calling baghdad contract non- disparaging clauses, we have a problem. many will refuse to review the anti-review clauses for public policy or other reasons. but judges also don't look to override the contractual provisions and so anti-review clauses are not guaranteed to fail in court. i would like to call your attention to a case gallon versus johnstone which involves a vacation rental contract that required were tenants to not use blogs or websites for complaints anonymously or not. we don't have any idea how many consumers were detoured by this clause from sharing their experiences. but we do know that two tenants did post public reviews of the vacation rental online in defiance of the ban. the landlord then sued in federal court. the court held that the reviews were not the territory, but that tenants nevertheless may have breached the rental contract, in
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other words this really means that anti-review clauses exposed the tenants potential liability for sharing was a non- defamatory review. if the consumer review freedom act will eliminate any indignity over the enforceability of anti-review clauses and it would mean the vacation, tenants and all other customers both in and join legal certainty about their rights to speak up. the second reason why we need to consumer review freedom act is that businesses are always seeking ways to shape and manage their online reputations. as they offer the illusion of control from anti-review clauses will keep proliferating unless they are banned. the fact that the healthcare industry illustrates how that might happen. in late 2000, a company called medical justice school for in contracts to doctors and other healthcare professionals that contain anti-review clauses. medical justices such pitched to the doctors and healthcare professionals with elegant and
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tempting and employees by using its contract. over the years i estimate over a thousand doctors under the healthcare professionals deployed such anti-review clauses and over a million americans signed such provisions it is incalculable. although medical justice changed the position in 2011 and told consumers to stop using the form even today in 2015 it can be hard to find vast numbers of patient reviews for many healthcare providers. although the adoption of anti-review contracts may seem to be an extreme case we are likely to see similar effects in other industries dominated by small businesses and professional service providers. why these categories of businesses in many cases these proprietors of identities are
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closely linked to the professional reputations. negative feedback about the business deals like it reflects upon them as an individual. if he vacation time and says she didn't like the rental decor the landlord might take that as a criticism of her taste. whereas if a patient said she didn't like her dr.'s bedside manner the doctor may feel like her personality is being concise. small-business owners and professional service providers will be attracted to anti-review clauses to prevent these public flows. therefore without the consumer review freedom act of their industries -open-brace anti-review clauses like the healthcare industry data. did. and we as consumers will all be poorer for it. consumer reviews are worth fighting for and we will see the congress taking on that fight and i want to thank you for the work on that and the opportunity to share my views. >> thank you mr. chairman, ranking member nelson and members of the committee. this morning i would like to
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make three points. one, no one has been paying attention over the past decade as consumer rights and slowly stripped away or often unseen forms of contracts should be surprised by the present growth of the non- disparagement walls. number two, the idea behind the legislation crafted to solve the problem is a good one and it fits into the long history of the legislation action designed to not only protect consumers but also the market economy. and three come as of, as of now we are unable to support this bill because it seeks to limit the enforcement right to speak with federal officials to read when i see non- disparagement clauses i unfortunately see the logical conclusion of the decades long corporate effort to strip consumers of yet another fundamental right. in fine print consumers are typically required to waive all sorts of rights including the right to seek relief in our public justice system can and now with these clauses clauses the right to even speak. what's happening is obvious. through the use of
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indecipherable language and nonnegotiable form contracts, corporations are first successfully strip consumers of their second amendment right to jury trial. why should we be surprised when corporations want to do the same to consumers as amendment right of free speech? in the early years as an attorney i would believe that these clauses that way fundamental constitutional rights would have indeed unconscionable and shortly there was no consent by the consumer. surely it was unconscionable for powerful business is to deny consumers the right to tell their story and our public courts. surely if we prove that they prevent consumers from getting legal help in getting proper redress they would be unenforceable. to stop businesses stop businesses from stripping the fundamental right from consumers. i.e., we should not repeat that mistake. therefore congress should pass a bill that prohibits the clauses. simply these clauses attack the
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very part of the fair and functioning american marketplace by prohibiting consumers from exercising the freedom of sharing those thoughts and opinions. consumer protection laws in the economy protect and the economy protect the market itself and all of its participants. congress and state legislatures recognize this fact on countless occasions and have passed a wide variety of laws on the very ground the ftc act and state laws were created with an understanding that the market economy wouldn't function properly if the businesses were allowed to profit from the unfair deceptive trade practices and inevitably gain competitive advantages. federal and state disclosure regimes like the truth in lending act exist in large part because of our understanding that a fair and functioning marketplace is dependent on consumers making informed and knowledgeable decisions. the fair credit reporting act that this committee is intimately familiar with was passed with a full recognition that credit decisions made upon
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the basis of faulty information whether by credit creditors or consumers undermine the vitality of the consumer economy. the identity to bear the non- disparagement clauses and the long line of the fundamental consumer market protection statutes the market economy only function properly when unfair practices are exposed and consumers do not make decisions based on faulty information. but instead on all information. whether disclosed by law or shared by others made available for consumers to use and or if you're in their decision-making process. while protections are proposed to the marketplace functions fairly and efficiently its patent is not enough to ensure that the laws are complied with. strong enforcement of the statute by public regulators or by private consumers is essential for the law to have the full effect. attorney generals across the country have done the work and enforcing state and federal consumer protections with limited in ever shrinking
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budgets and small and ever-changing staff. these important public services sought ways to maximize their ability to protect state citizens and state economy. efforts include collectively working across the state lines in a bipartisan manner have been essential in obtaining justice consumers far beyond what might be possible if it were limited to what was achievable by their own limited staff and advocacy tools. the experience and the capable in the instances they are intending to enforce the law again led a measure of justice of the bias completely unattainable. simply if we want the attorney generals to enforce the law congress should not limit the state officials from choosing how they best protect consumers in their own states. there's no place in the american economy for denying consumers power of the rights to speak freely right to speak freely about their experiences in the consumer marketplace.
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however if the consumer market protects the statute to be fully effective it must be fully impossible. because this limits the ability of public regulators from using all of the necessary enforcement tools, we must currently support it. provision is removed from the bully would be pleased to offer full support for this important legislative effort. >> we appreciate very much your comment on the legislation and obviously we will take into consideration your thoughts as we continue to shape the process. i want to start with five rounds of questions and you've been through a hurling deal finally winning in court. more people would have given up. it comes across the country to share the story with us today and experience that you have a.
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>> as i said that the only two things that we ever wanted to have happen is for my husband's critics to be clean so we could move on with our lives as we had originally planned and we want to make sure this never happened to anybody else ever again. when he first contacted i first contacted the media i hoped that if our story got out there, other people would have been inspired to come forward to see these people are giving this to me, what can i do to stop it. i'm happy to do anything i can to assist. >> we appreciate your story getting out there. you testified today that one of the purposes for these clauses is to bully and intimidate consumers into removing negative reviews and the testimony health
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tripadvisor's demand for $3,500 shocked and scared you. i guess i'm wondering if your experience with klear gear has given pause about posting reviews for other products. >> absolutely not. there's great products to let other consumers know that psu should definitely buy from this company, they are wonderful. and also for companies that may be fall short of the markand didn't provide such a great product. that information is just as important as a good review. >> i guess after what you experienced with klear gear it couldn't get any worse. >> i would hope not. >> now, mr. medros, tripadvisor has taken steps to ensure that they use the clauses and on the other side of the equation i might add, amazon recently sued a number of companies that
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allegedly facilitated the fake reviews online. do you see other large internet companies taking measures to clean up online reviews to make sure the consumers are getting accurate and authentic information? >> absolutely. before i answer that, let me first thank you for inviting us and for pushing this decision forward. we think it's incredibly important legislation. without a doubt, we see businesses and hospitality industry attempting to silence critics of their services and this plays out across a number of industries. you mentioned amazon. we have seen a case with yelp trying to push reviewers or other reviewers to remove their comments and to reduce the severity of their comments or to
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outright bury the comments with other contacts. >> professor goldman, you made a great point in her testimony when your testimony when discussing how consumer reviews make markets stronger and more efficient because they help guide consumers to the best products and services. to what degree do you think that the clauses may be destroying the market and do you think that most consumers are aware of that but is going on? >> i think the contract clauses are only a part of a much larger problem. there are so many disincentives for consumers to share their opinions and perspectives about the differences that they deal with. and each of those have a friction point or a wedge in their willingness to share. but most consumers don't have the fortitude and the confidence that she has. the clauses are just one way
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that businesses can threaten consumers to get them to not only pay for themselves would remove themselves once they've been posted. as another tool they use like in the knee was like threatening defamation and simply saying we are going to sue you and take you to court if you do not remove it and that's why i would also call your attention to things like the federal anti-slap all that's been considered and that would be another tool to protect consumers from having their legitimate reviews driven off the internet. >> my time is expired. so, i will turn to senator nelson. >> i'm so sorry that you had to go through this experience. when i went to the tv station and it started getting some publicity is that when you decided to go into court because you are listed as the plaintiff.
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we had been seeking legal help before we went to the media. i had contacted several more years and have done a lot of legal research online to find out what my options were for all the lawyers i spoke to and decided to be have a case and gas, you do i said great can you represent us and they said no we are not touching that with a 10-foot pole. it was so shaky and so big that most students didn't want to. it wasn't until after we spoke to the media i was hoping to find a lawyer that was willing to step forward. that's when they said we can help you if we want to help you. we have the means and resources to do so. spank that is a good story. mr. medros, i wanted to get the other side. to tell us about a minute of bad actors trying to take advantage of businesses by threatening to
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post a false negative complaint. there's a negative review that has threatened to share its experience online and about business rightfully so has concerned to impede the future efforts and we encourage businesses to proactively communicate the threats to us and we then monitor them for the instance of the negative reviews in the vast majority of cases those reviews never appeared there as empty threats. the businesses respond to any consumer review so we believe that transparency will solve this problem. they write the review businesses get to respond and future
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businesses get to read those responses and the back and forth and make their own decisions. >> you encouraged the businesses in the false review to contact you. whether this legislation preventing business owner who is threatened with a false or malicious review in court against the consumer for defamation? >> i'm not the best person to answer from a legal standpoint but i don't believe that it will prevent businesses from interacting with tripadvisor. we do employ an entire staff and we look at every review where an owner or another member of the community flags it as inappropriate against the
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guidelines or perhaps irrelevant >> at the end of the day i think what we want is the access of the courts for whoever is the degree to party, the consumer or the business. and in the case of ms. palmer at once her access to the court. let me ask you on the arbitration clause when he recently used this program to basically trade away the right to go into court in exchange for a 200-dollar discount should we be doing something to protect consumers from more than just the non- disparagement?
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>> you made a very good point, senator. the way that consumers can seek redress is in the public court system. a lot of the stories and a lot of the data damages. she was lucky that her story was a very compelling story. sometimes you need to go to court and publicizing ways, so what they did in that instance is go to every consumer place that you can imagine a. in most instances people were signing away their right to go to court without ever knowing about it. arbitration clauses are everywhere in our economy today and there is a dual justice system happening right now where consumers don't have access to the courts whenever they reach an agreement or enter into any
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sort of an agreement with any type of business. >> these things, just recently fiat is one example, and the gm ignition switches and so forth and now the air bags, that still in the news as a matter of fact today. so thank you for your comments because these things that are subject to mandatory operation as you would is really losing a lot of the ability if we cut off the access for either of the the aggrieved or the degree of her into the courts. it does specifically say that defamation cases if something said that is untrue as cases can
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proceed we don't do anything to impinge on that right. senator mccaskill is still basking in the kansas city royals -- >> we hardly have anybody show up for the party. >> i noticed everybody was there was thanks to question what are you doing here. >> there are not many people that many people in kansas, so it's basically missouri. >> i try to have a bit with the senator from new york and the bed was i would offer a barbecue if you would agree not to talk for 45 minutes. [laughter] he accepted the bet, not mine. >> that is a bad move on your part. >> many have another loyalty elsewhere in their state. and finally, senator blunt and i are wearing blue and you are wearing red. >> look at that. i won't even go into the history of the team in kansas city
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missouri but i will be glad to acknowledge that we are welcoming all of the fans from kansas. >> she is a loyal cardinal fan. you are up. >> thank you very much. i'm pleased that senator has a bill we can all three -- agree on. and let me ask you i'm assuming that there was a contingency agreement with the lawyers that ultimately represented you in this case. fortunately, public citizen as a nonprofit was kind enough to work with us since we really could not afford legal representation office on the scale. that was the other side of people saying we are not touching this. so when i said what if you just wrote a cease and desist letter. there were thousands of dollars
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and of course that's why it's very hard for an individual to get to court unless there is a contingency agreement and even with the contingencies they said no we want a retainer and we said if we don't have $3,500 to pay klear gear, we don't have $5,000. >> one important point i would admit publicly i am a chicago cubs fan so i'm a little disappointed today but that's okay congratulations kansas city. one important thing about the consumer statutes is that it's particularly like the fair credit reporting act they have the shifting provisions from soap attorneys that take the case with the fair credit report in case and the damage that was done to ms. palmer wouldn't charge ms. palmer said palmer sodas and contingency. what they did is they only get paid if they win that case and the court will award them damages after they successfully been the case. so it's a little different from contingency and the weight of way that the congress drafted
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the statute in the past particularly when it comes to the private enforcement to have those things when they've been damaged like ms. palmer. >> did they recover the cost of the litigation? >> we are still working on tracking klear gear down to recover any cost. >> so you haven't collected data. >> are they still in business? >> as far as i know. >> it should be noted that in the judgment awarded the judge did award or settlement and tacked on the lawyers fees for public citizen as well so if and when anything ever is collected -- so they have the right to recover but if you lost they wouldn't have gotten anything.
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>> true. they are not interested in aren't interested in working on a contingency basis they want the retainer up front. >> and that is one of the challenge is how the challenge is how the funds also triggers a legitimate complaint with the damages don't appear to be enough to warrant the risk that a lawyer takes on when they get into a costly litigation and that is one of the advantages these big companies have if they know that it's small enough and there's two things a lawyer has to have to bring a lawsuit. one is liability and second is damages and how large the damages are as relevant to whether or not that lawyer wants to take on the costly risk of going forward with a lawsuit which does even the playing field in some ways. let me talk about the use of
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service. now i know who drafts this stuff and they are lawyers. but this is just in terms of service. website terms, conditions and notices. and this is another five pages of fine print is privacy. how many people do you believe are reading that? >> i would imagine very few people read through the entire competition privacy statement. >> so what is the point if we know that nobody is reading it? like aren't we working at making this -- have you thought about making it a step of making the terms of service as forthcoming in as clear as the rest of the
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website? >> we would welcome the opportunity to make privacy and terms of service beer. we take privacy extremely seriously and terms of use extremely seriously and giving us the ability to moderate our content according to our guidelines. ibb that in the case of a bill like this where you often see is a set of standards set in terms of the use and privacy are conveyed to consumers. >> one of the reasons the contracts are so successful is because they are buried in a way that the average person is never going to understand what is being done to them. i think many of them would run away" in horror if she realized what that company was purporting to do.
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it seems to me this is something we have to work on because this is a lot of waste because nobody is reading this stuff so why are we doing it if it's not providing the service but it needs to provide to the consumers that it is ostensibly designed for this we have to work on that. >> in your case if they added this long after the transaction occurred. >> i read through the terms of service three times to make sure there was nothing in there that would have prevented me -- i didn't purchase the items, my husband did, i wanted to make sure there wasn't anything preventing me from posting the review versus my husband posting it so i did read through several times and when they came back three years later and said you violated this non- disparagement clause they looked at my husband and i said that didn't exist to be there was no non- disparagement clause. >> [inaudible]
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[laughter] >> you actually read those agreements that is most impressive to start with. >> a neighbor to the south, senator fisher. >> professor goldman, you mentioned that small businesses in particular may make use of these non- disparagement clause is. as many of them view it as personal when they give negative -- gets negative feedback. i'm on small business here in the senate and i fully understand how important a small businesses are to the state of nebraska and to the economy here in our country. so while i agree that the use of the non- disparagement clauses is a practice that should be discouraged, i would like your views on whether this bill contains sufficient protections for small businesses that are out there. do you think it does? >> in the end of the goal is to
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create a level playing field for small businesses. so any of their competitors that are distorting their public persona using these anti-review non- disparagement clauses is actually hurting the overall marketplace and opportunity for small businesses to go and win over customers. if anything i think the bill is essential for preserving the vitality of the small business community and making sure the markets are open for them to come and enter. >> you think the protections are in this bill? the >> i support the bill as it is currently drafted and i did write some thoughts about ways it could be tweaked at each of them deserves further discussion even if we don't do that i think it would be super helpful in advancing the interest of small business. >> do you have any comments about if small businesses -- did you believe they are protected under the bill the way that it's drafted while we are still
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making sure that we allow consumers to be able to express their views without being punished? >> i would echo the comment that a lot of the damage from these clauses actually are harming the small-business competitors who are doing a good job. consumers don't have a way to wait so it might hurt a particular small business that helps others. second, there's still provisions and legal remedies a company can use if they feel like someone has outright lied to the bill doesn't prohibit a company from taking action in that way and as i said before there is a lot of enough evidence that small businesses are not active in small-business owner posts something and says they are concerned about that or we don't agree with the review, but it really can minimize the damage is a company is sincere in what they are trying to do. >> do you think small businesses have the resources where they would be able to respond to those negative comments where
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they can take action? it's hard for consumers to take action. we've heard that. it's difficult. the lawsuits are expensive but what about small business on this as well? how do we reach a balance? >> i think a lot of the online platforms work you can monitor what your customers are saying about you and frankly in the internet age that is something every business needs to do area you're not going to search the web every day for everything but there are platforms you could and should monitor as a small-business owner and doing that i don't think it's is overly burdensome and it's a quick reply just a one minute kind of reply every once in a while you don't give negative reviews every day so i don't think it is a burden to do that it is just good practice now in the internet age. >> also, mr. atkinson in the senate version of the bill, we are looking at enforcement of
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the prohibition on the non- disparagement clauses by the federal trade commission and in the house version, we have the enforcement by the court of justice. do you have an opinion one way or another on who would be the best position to assume that will? >> i don't have an opinion on that with the person that needs the work for us is daniel caster wasn't able to be here and i will talk with him and i would be happy to get back with you on that. >> that would be great. thank you all for being here. >> think you very much for hosting this hearing and for pursuing the concepts contained in the legislation. on the topic of small business, i would assume small-business actually uses the reviews as well. they are in a consumer small-business and need information about what the businesses, large or small that they might want to deal with and online reviews may be helpful to a small-business and making the
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business decisions while several of you outlined some ideas of how this is harmful, one of the other ways is a small business cannot small-business cannot made a mistake it's more difficult if they enter an agreement for purchase with another corporation that turns out to be a bad deal the consequences are greater so i would assume that small businesses also utilize the review they make purchases of goods and services. everybody's shaking their head. then let me ask about the state law. in california i think in particular have the state laws than dealing with this issue? >> if others are pursuing that is true? >> is there anything we can learn from what is transpiring? >> i hate asking this question
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in a way that this law has been written or interpreted or enforced? >> i don't think that there's enforcement actions in the loss we don't have any plans about how to playing in the field. it is relatively new so it is early in the process. the only thing i will call attention to to his there is a statutory damage provision of the california statute that awards the consumers who are subject to these clauses to obtain statutory damages and i think that is a topic that is worth discussion whether that would be a helpful addition to the law. >> in addition to that suggestion with me ask a broad question why we are focused on non- disparagement clauses in this world of online reviews are there other or similar issues the commerce committee that they ought to be paying attention to, a couple that i think has been mentioned previously take reviews, post reviews, are there issues that surround this new development certainly in my life
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particularly as a small-town resident these reviews of her after church, the grocery store, at the café and people within the community would talk about what service they bought or didn't get from how quality the product was or wasn't. today i suppose the consequences are magnified because of the volume of information that is now available. is there something we are missing is the only look at the legislation to this issue of non- disparagement clauses? >> i will reiterate my interest in the federal anti-slap solution. it would enable lawsuits that are brought alleging defamation or other types of harm like that that is on the content or to be of social interest to be tossed early if they are illegitimate and so the real way that they
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get scrubbed off the internet and through these clauses but because people post than they are threatened to take them off-line and she could and review them but that was unusual. but in all other cases when consumers get those, the content comes down instantly and the federal anti-slap law when it helps some decide i am not going to be bullied off and i won't be getting my house on legal fees that i can defend my interest in court. >> mr. atkinson. >> i would second mr. goldman's point on that. i released a report last year on the whole issue of anti-slap and the impact it has on the internet economy and commerce, so we would agree with that and i think that is another component. both pieces of legislation are important. >> mr. chairman, thank you for this hearing and i apologize to you for intruding in your commentary on the royals, just
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nearly impossible not to have the continued battle in the presence of the senator senator from missouri. [laughter] >> i wouldn't have it any other way. [laughter] >> thank you for your courage and clarity i know that you have been through a lot and i imagine it's been difficult several years and we really appreciate everything that you're doing. and your case illustrates why we need the law because individual consumers are in no position to fight this injustice in your case also shows while we need a federal law and patchwork of individual statutes are not going to work in the age of the internet. my first question is for mr. atkinson been talking about two things. one, consumers don't know what rights they may be waiting as they click i agree or sign a contract at the hotel desk and
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then there's this other question related to implementation and admonishing or warning customers against a negative online review. but those are sort of different technical approaches. so which is it that these companies are really employing? are they tracking customers into signing away their rights or are they morning customers against the negative online review because they can't be doing both at the same time it seems to me. >> i think first of all we don't know -- there really hasn't been enough surveys of this. it's a lot of anecdotes which i think is compelling we just heard one here but in other folks talked about that. i think there's a lot and we don't know exactly what the strategy companies are using more of. i think one of the reasons this bill is so important is that it's not just the facts even if there were no law and people think that it may be gone after
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and i think we are at a point if we don't solve the problems in their could be something in most most consumers minds where it gives them a little bit of doubt and fear i heard about somebody getting sued i'm just not going to take the risk because if you think of somebody contributing a review they are actually being a public citizen, they are contributing and taking their valuable time. it's not going to help them. so if we have a collective climate of fear, people are nothing to be able to do it. >> but it does point out we are operating at the beginning of this problem it seems to me and therefore we are lacking good decision support on the size and scope of the problem. speaking of that, does anybody on the panel know primarily whether the use clauses are being employed by small or large enterprises? because it seems to me that is a pretty important question and i would imagine that the reputational risk of a big
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national or international brand would probably cause bigger companies not to utilize these provide private way to know whether some of the bigger companies are using them. does anybody know? >> i don't think that trip advisor sees any evidence one way or another small businesses up to potentially large businesses want to in effect to distort consumer opinions online by getting negative reviews withheld. >> let me move on to the way tripadvisor works. you have a pop-up that warns consumers if there's a particular hotel or travel company that has a non- disparagement clauses that correct? >> that's correct we put a red badge on the property warning consumers so that they can make
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an informed decision about whether to stay there knowing that there is a clause. >> how do you figure out whether they have a non- disparagement clause is that based on consumer complaints or do you have a process internally for -- i would imagine it's a resource question for you to have a team of lawyers scrubbing all of their individual contracts, so is it just based on if something pops up when you notify the public? >> it's based on consumers reporting to us and investigating and that speaks to any other reason why we need this legislation. we only see a small percentage of these contracts that may exist. some consumers may not notice it and maybe two people to report it and so widespread and banishment of the clauses is critical for all consumers. >> i think that is the important point with respect to whether or not the private sector and sort of internet-based solution and it seems to me that there is not
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without any statute because you just can't make yelp or trip advisor or anybody else responsible for any company that may or may not be mentioned on your platform. >> i would wholeheartedly agree. it would be a game of whack a mole. >> thank you. senator. >> thank you mr. chairman. this is really an intriguing subject today. i spent a number of years with a cloud computing customer experience solution. we touched hundreds of thousands of millions of consumers and it's an overused cliché to suggest the customer is in charge. we all know that it's a cliché that people started waking up and also i think second feedback is a gift and i think it is insecure companies like bullies on the playground or insecure would have these
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anti-disparagement clauses. welcome to the free market and the internet lets compete and let the consumer habits voice and i think frankly it is condescending to consumers to suggest that the consumer can weed through it. they see the folks a bit on hands to. what the consumer sort that out is my view on it recognizing there's still a problem with companies, some companies posting false claims to prop it up and competitors posting claims to disparage. having said that i can tell you from montana's economy viewpoint, tourism is one of our largest businesses. its $4 billion coming 11 million people visit our state and they are going online and booking trips relying on online reviews. i spoke to a small business owner couple weeks ago and kind of an obscure place i said how was your summer and he said the best summer ever. he said why.
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we had a big marketing campaign and he said online reviews. people went and they found us. either way, the national party has 4.5 out of five, a little hometown little hometown advertisement there. [laughter] anyway, i guess i am curious about how we ought to approach fake online reviews if there is a fought on best practices whether it is business as paying for positive reviews were competitors right in false and negative reviews, curious if you could share some best practices cut policies and procedures that you would recommend should be used to combat fake online reviews. >> your first point of consumers becoming more sophisticated in some ways it vandalizes them, consumers are becoming more
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sophisticated and people notice that reviews and good reviews and i think as people that were comfortable with the internet economy, they will be able to sift through data. in terms of what companies are doing, there are companies like yelp and others that have very sophisticated algorithms and they have employed software engineers and data scientists to be able to use technology to flag these in a high risk of being false and then taking them off automatically so there are companies and others technology now companies are employing that simply those reviews don't get posted. >> i would like to first point out that no matter how big the problem is, the clauses are never the solution. so, the bill i think it's a legitimate concern but i want to stress how important this bill is irrespective of whatever concerns people have. but i think that with faked reviews we should recognize
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consumer reviews are still a relatively new phenomenon. we can take them back maybe s. r. us 20 years ago but really the modern consumer review and the economy as a dozen-years-old and if you think about it in those terms we are seeing the evolution of the review sites and developing better aggressive techniques managing to consumer reviews and in the end they are the oceans. we need trustworthy platforms for the review and i think that we are seeing improvement on that front every day. stack i worked for procter & gamble. this is incredible invaluable to you that this is what is what used to pay a lot of money to focus groups for and now we get into virtually real-time unedited face of these consumer experiences and that's why we would need to remove them based on the stories here as well but this is a gift if you want to become a localized company,
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embrace it. >> we see over and over again stories like you told businesses in remote places and places that consumers wouldn't have thought of traveling to or wouldn't have had the courage to travel to and i think the best businesses leverage upon the trip advisor to base the consumer reviews and use it as a free marketing tool to encourage people to share their opinions and set their expectations of what that trip is going to be like so you feel safe to venture to some of these places that are amazing experiences all around the world. we have a story over and over again from business owners what makes that possible this possible is the scale of the platforms, the ability for consumers to share those opinions without the threat of being sued or bullied by owners who may not like every piece of feedback and the best businesses take that feedback on an ongoing basis and make their business better.
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they improve their service and they change things about their property, they remodel and use that as a feedback to otherwise companies would've paid millions of that have paid millions of dollars for in the past. >> thank you senator. in our line of work we get plenty of feedback so -- we do. [laughter] i'm going to embrace the idea that it's a gift. [laughter] >> i will stay off your face but if you stay off line. [laughter] thank you. senator from minnesota and noted author senator klobuchar. >> thank you mr. chairman. i was thinking the same thing when he said it's a gift. i was thinking of some of the hilarious facebook posts that i get and i won't come into them right now but i collect them because they are so amusing. so, this is a very important though and i want to thank the chairman and senator schatz for
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the work they've done on this and i guess i would start with you ms. palmer, your experience sounds like quite an ordeal. the scale of the harm caused by what was initially a $20 purchase is astounding, and your persistence of finding a solution is extraordinary. in response to klear gear's initial demand to take down the review before they made the negative reports to the credit rating agencies how much time would you estimate you and your husband spent researching and responding to klear gear's demands? >> it was several hours between. i have chosen ripoff seemingly at random so it took me to find out that they don't allow reviews to come down it took me several hours to find out what options i had. i believe to the point of actually e-mailing them and saying here's my problem i am now being bullied what options do i have come and they had to respond to me and kind of spell
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out this is in our policy and the legal language is a little convoluted but basically we don't allow you to take them down but here's why. we want to make sure that people are free to post a review without feeling bullied and without feeling like they have -- without allowing businesses to remove it. but it was several hours. >> i think this is one of the softball questions. do you think that most are as likely to be persisted as the palmers and respond to threats from companies seeking to enforce non- disparagement clauses and what will likely happen if they are not as persistent? >> ms. palmer's story is remarkable and i wish all consumers acted like she did. it's quite amazing. i wish i heard more stories like that. most people give up. consumers do whatever they can to just move on with their lives and get the review removed.
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they tried to seek legal help and she couldn't get it. they would walk away from the problem and probably unlike ms. palmer stopped posting reviews. that would have a chilling effect on most consumers from ever doing it again. i think ms. palmer is unique and we should clone her for in terms of her behavior here. >> very good. thank you. i remember i once had a similar thing with a bill and i found some people that have pursued things like ms. palmer david to talk about it and it was like a lutheran minister and a math teacher had gone to see these tiny little charges that added up over time so you're in good company. i understand the consumers to be coincidence small business owners that it can hurt their livelihoods. you cited a study showing that one star increase in a
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restaurant rating can lead to a five to 9% increase in revenue to put a less rosy spin on it a one star decrease in a business rating can have a serious consequence on its bottom line. non- disparagement clauses with tools do you think small business owners have to address unfair or false reviews? >> in the lion share of the ratings they are accurate and so the most portentous event could important thing in that case would be to improve the service or quality of the food or whatever else. and a couple people said that is valuable information for a company to be able to continuously improve their service. second, a lot of these platforms including yelled and tripadvisor have mechanisms in place where you can challenge reviews that are bad but not in the sense of taking someone to court with just the third, companies can and do post and say we don't agree with this review and
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here's why we don't agree with that or we do agree with it and here's why we are sorry. >> i was looking at some last night, actually come and not than not in preparation for this hearing, that i would like to say that it was. >> we give consumers the ability to share this experience and the incentive ultimately when we hear about limits to free speech is to penalize businesses that try to trail of speech. >> does your research and bear out what was just talked about? >> he talked about the fact that there is incentives for companies to limit unfair and false reviews. >> you're talking about review
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sites. they are the mechanism for providing feedback to the marketplace but even themselves are reputable and persuasive and they are convinced they are trustworthy and that is a great incentive to finding a safe review. >> thank you all of you. >> senator blumenthal. >> i want to thank the chairman for not only having this hearing that for lending his support to the idea of protecting consumers against this new ingenious wrinkle and that sort of age-old practice of burying traps in the fine print of contracts that kind of gives new meaning to get in tricks and traps that discourage consumers from informing and warning other
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potential consumers about the downside of particular experiences or products. these sorts of senses gag a consumer from getting services or goods a negative review when they've paid for it that you disappointed in it and they warn other consumers. usually they are very as you know in the fine print and the contract and invoice they are a one-way ratchet and prohibit negative reviews of not positive ones. ..
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attorneys general have a vital and vigorous role in protecting consumers and adding to the resources and intellectual weight of the federal government. so i very much appreciate the chairman's understand in that regard. some probably will raise the question why do we need a federal law cracks and the answer is quite simply that these standardized antidefamation provisions may be considered void under state common law, but there are a
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number of them throughout the country and they confuse consumers because consumers have to go to different state laws to know whether or not they are valid in one state or another state. and i would like to simply say that making these provisions a per se violation of the ftc act is exactly the right thing to do, riveting their use as a chilling effect they create in the first place promotes the free market nationally. and these products, services are sold and marketed nationally. the information should be available nationally without the impediment of a patchwork of different state laws. so i would like to ask mr. goldman and mr. medros, can you talk about the virtue of a
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federal solution here wax let's say a connecticut consumer gets a hotel to a website located in north dakota for a hotel in utah. should a consumer have to research the state laws in three different jurisdictions before she can exercise her free speech right? >> certainly we would think ms. palmer's case is a great example of how difficult it is for a consumer to, one, understand the limits of these clauses and, too, to get released from the. they don't have any valid to anybody in the ecosystem. they certainly hurt consumers. they probably and certainly hurt other businesses that play by the rules, and they depress the overall market. >> i would simply add to the extent we believe that the clauses may already be illegal, that may depend on things like state interpretations or public
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policy. there are significant state and regional variations on those legal doctrines as a result provided a federal standard would clean up any ambiguities. >> thank you. my time has expired. this subject is one that is extremely important, and i thank you all for being here today. thank you, mr. chairman. >> senator markey. >> thank you, mr. chairman very much, and thank you for convening to beijing. online review sites provide customers with an important and open forum to provide free feedback to share experiences and hold businesses accountable. somebody's website even our even our customers to compare products and prices amongst many service providers, helping consumers select the best product at the most affordable price. last week i visited tripadvisor's headquarters in massachusetts and sulfur stench of advisors wonderful staff working on key innovations and interfaces needed to ensure
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consumers have unfettered access to online reviews and travel prices. i am proud that one of the largest travel sites in the world is based in massachusetts, and i'm happy to see tripadvisor testifying here today. it's come to my attention that some airlines may be restricting access to their schedules and prices, making it difficult for online travel sites like tripadvisor to post different flight options online. if the consumer cannot view all of the flight options and prices on one website, the consumer may be unable to identify the best travel prices. as a result the consumer may pay too much for her flight. mr. medros, how are consumers harmed when airlines do not provide fai fare and schedule information to travel sites? >> consumers are harmed any time you reduce transparency. in this case it would be pricing and availability. given the consolidation in the
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airline industry take in the united states, that limit of information, that limit visibility around real pricing, availability doesn't help consumers plan trips, doesn't help the economy grow through travel and tourism. >> are airlines currently preventing travel sites like tripadvisor from accessing ticket fees and flight schedules? >> yes. increasingly airlines are attempting to withhold that information and not make it freely available for consumers to compare and shop. >> should, mr. medros, airlines provide travel sites with ancillary fee information as well a fee on baggage or advanced seat selection fees and all those things? should that be made available to the consumer can see what the total charges going to be two
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by? >> absolutely. i can't think of any consumer debt wouldn't want to outright what to expect in terms of pricing. >> so we have gag clauses, provisions buried in contracts that discourage customers from posting negative reviews online, which ultimately may wind up hurting consumers and businesses alike. i am concerned about these efforts to stifle americans freedom to post reviews. mr. medros, as we learned today some customers are getting penalized for posting on his critical reviews and the mere threat of penalizing customers from posting negative reviews may discourage some customers from posting at all. with our customers posting their honest assessments of products and services, the customers may not have the information needed to make informed purchasing decisions. how can gag clauses also hurt
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businesses? >> gag clauses hurt businesses by reducing the amount of feedback that they didn't, and by distorting the claim that the marketplace for other businesses in that market. >> mr. rheingold, what other attacks on consumer rights are some businesses including in contracts in terms of service? [inaudible] >> sorry. this is the end of the line. we have seen it going on for years and years. clauses to restrict people's ability to get to court, arbitration clauses have been existing for longtime have now grown to be widespread across every single industry you can imagine where people have complaints simply cannot get into our public system of justice to its are really concerned. the right to speak is sort of natural following the right to go to court to not surprised at all by what we're seeing today spend ms. palmer has highlighted one of the more egregious examples of gag clauses. can you, mr. medros, provide
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other examples? >> absolutely. we have seen in the past, cases similar gag clauses with fines upwards of $5 million in daily fines of $50,000 to consumers until the reviews or removed. we've heard of cases from consumers have contacted us to remove a review because of the threat of a lawsuit or the threat of other action against that individual. in all of these cases the consumer stands by the content but is choosing to remove the content and squelch their own speech so as not to end up in the case of ms. palmer with a lean against them. >> thank you. thank you, mr. chairman. >> thank you senator markey get a couple quick questions and we'll close this epic this would be directed to mr. atkinson or professor goldman are there particular industries where consumer gag clauses are
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especially pervasive? >> i mentioned in my initial testimony about the medical and health care industry, where the entire industry was encouraged to adopt these restrictions. and many, i don't know exactly what percentage, but many participants did so. i think that that industry has moved on. i'd like to think that they recognize the error of their ways. but i think it's an illustration of how the clauses can sweep an entire industry of was but a few people tried it, other businesses may see that sounds like a pretty good idea, that gives me the control over my reputation on what. and if i don't do it by competitors will be having a glossary reduce wind will have the good and dared to check the good and bad aired in public. in opening remarks a major we will see other industries where the clauses will sweep, that are
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driven by small businesses, so lawyers, doctors, doctors et cetera so small business owners, places like hotels or bed and breakfasts are good, fertile grounds for bringing up these kinds of clauses. >> anything to add? >> i would agree. certainly health care, retail, hospitality, personal services, areas where you would come companies we are dealing with individual, with the actual service provider. >> i would like to dash the i would direct this to everybody on the panel. the question i have is deeply it strikes an appropriate balance in terms of consumer rights versus the debility of this is to protect the reputations? >> businesses have a wide range of tools to protect the
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reputation. i can't come up with a single circumstance where it's legitimate to tell consumers they can't share their honest, truthful feedback. in my mind on the particular question that the bill addresses there is the balance i can see it would be appropriate to be worried about. it's really in my mind and abuse of this is consumer relationships to tell consumers we want your money but we don't want you talking about us. >> anybody else? >> i think that it was a very strong bill editor import bill and defender protects consumers and to think as mr. goldman said, there are rights that this is can use to get a strong bill and now that one prohibiting strict we are happy to support it. >> ms. palmer? >> i would also like to point out that as consumers as it's been stated we don't have a lot of power when it comes to trying to defend ourselves against a business that would seek to have those remove a review or come
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after us. have a lot more money, a lot more lawyers on staff than we could ever choose to get. knowing that there is a law in place that says you guys can't come after us just because we told the truth is extremely empowering to consumers. i believe it will go a long way. >> i agree with mr. goldman. qaeda figures anything here to balance what you're to legislation is trying to prevent or things that are simply unfair and harmful to consumers. as we have all said, consumers, businesses have many other options that this bill would not take away. >> i would just add that not only are consumers armed but other businesses that play by the rules i want a level playing field are also harmed by the existence of gag clauses that distort the market. >> thank you all very much, and thank you for your testimony today, for your responses to our
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questions. and ms. palmer, thank you for your inspirational story, an example that one person really can make a difference. i think you were sort of the reason why this issue has taken on a life of its own, shortly why we are here today. and thank you to all the panelists. we spent a lot of time on this committee, the commerce committee, studying these issues related to the internet, how do we keep the internet ecosystem protected? how to but look at the potential that it offers? you look at the digital economy and how powerful that is and how many people are using that to do business, to purchase products and services. and, obviously, what is happening out there in terms of these various practices seems to completely contradict what we are trying to accomplish in terms of creating more freedom and protecting consumers.
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but certainly empowering people as they use this powerful tool in a way that can enhance not only their lives but those around them as well. so we appreciate your insights and thank you again for making the time to be here today. we are going to try our best as we move forward. we have a mark of schedule and a couple of weeks and will hopefully try to move this bill to the senate floor and try to get some action on the. we have a companion bill in the house and you would be nice to see something that we could put on the president's desk that would address an issue that i think is becoming increasingly important in our digital economy. so the hearing record will remain open for two weeks. during this time senators will be asked to submit any questions for the record. upon receipt we would ask the witnesses to submit their written answers two committee as soon as possible. thank you all again for being here today. this hearing is adjourned.
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[inaudible conversations] >> shortly, president obama will head to the white house briefing room where he may be joined by vice president biden concept of state john kerry to make a statement about the administration final decision on building the keystone xl pipeline, killing the pipeline would allow present, to claim aggressive action on the environment, potential strengthen his hand as world leaders prepare to finalize major global climate packs within weeks. live coverage with the president on c-span. it should get underway in just a moment. in just a few minutes you on c-span2 will go live to the american enterprise institute to bring a discussion on the
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criminal justice system and prison reform. at their former oppressors will take part in the program. it gets underway at noon eastern on c-span2. until the delegate caucuses to get on the highway bill from those warnings "washington journal." >> host: joining us is a transportation reporter with "the associated press." there's been a lot of activity up in congress with regard to transportation funding. where do we stand right now? gets back the house passed a that would fund a transportation, well would authorize spending for transportation for another six years it but it only funds it for about three years your. >> host: why did they do it that way? >> guest: they ca can find a wider even than the money money they've been there to pay for it is questionable. >> host: so right now the house has passed a transportation bill for six
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years funding for three years. what has the senate on? >> guest: this it has been essentially the same thing. in fact, the house and senate are working fairly close together on this. they are in communication to the republican staff in both bodies, and the bills are very, very similar. it's their big bills. they cover a lot of transportation policy so that will be a lot of details to work out between the two as they go to conference now. but overall there's a great deal of similarity house of representatives how much money are we talking about in these bills? >> guest: the house bill authorizes 325 million over six years. excuse me, billion. thank you. at the senate bill is roughly about 350 billion. >> host: for six years? >> guest: sounds like so much but really it's just the amount of money we already spending adjusted for inflation in the house bill.
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kind of the status quo, and in the senate bill it as maybe, does the same thing and it adds maybe a little bit more money each year. baseball increased each year. in the meantime secretary of transportation anthony foxx has told us to do with our aging roads, bridges, highways, we have to spend at least 400 billion over that amount of time just to prevent things from getting worse. >> will put the phone numbers if you want to participate about the u.s. transportation needs. you can see the number at bottom of the screen while we talk with joan of "the associated press." with regard to the house bill and the senate bill, where does the bulk of the 320 billion go at this point? >> guest: most of that money goes to states, and?
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>> guest: agencies in the form of their annual aid payments to do all kinds of construction projects and work. >> host: how much other states contributing to their own roads? >> guest: well, the states contribute a lot. the amounts they get from the federal government, it just depends upon this day. some states, the share of the federal government provides is less than half. sometimes fairly small. but since it put in a lot of their own money. but other states can be up to 70, 80%, federal money come in terms of the overall money they spend. some states like let's say wyoming for instance, they have a lot of roads. they are a big state in terms of
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like but didn't have a lot of people to spread the cost of those roads over. think anything. so they literally rely on federal aid. >> host: let's take a home state of new jersey as an example, big? >> guest: state. what's the breakdown? >> guest: i have to tell you i don't know new jersey. i don't know all 50 states. but if you new jersey is one of the ones that put a little more. >> host: what is at 325 billion in the hospital and 350 billion the senate bill come from? >> guest: the highway trust fund is supported by federal gas and diesel tax, the 18-point tax, the 18th workforce is a gallon gas tax, 24.4 cents a gallon diesel tax. they have been providing the bulk of the money for decades for transportation spending but they are not keeping up because they haven't been increased in
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more than 20 years. so there's a gap between the revenues they come into the highway trust fund and what we are annually spending on transportation. >> host: the debate and house was pretty freewheeling your a lot of amendments translate this is a new, this was speaker right first foray as how he's he's going to handle things in the house and she's promised his rank-and-file that things are going to be a lot more open. so they allowed a lot of amendments but it was not a totally open process. there were more than 100 amendments debated, and many of those are voted on in voice vote. but certain, more controversial amendments were not permitted train with such as? >> guest: welcome raising the gas tax. there was a proposal to do that. there was another proposal to index the gas tax to inflation. is a proposal to change the way
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we tax corporations that partner profits overseas and use that money for transportation. the leadership clearly didn't want to do with those issues than one joan lowy, windows highway funding run out at this point? >> guest: well, things are okay right now. well, i shouldn't say that. the authority to spend transportation money runs out on november 20. the actual money in the trust fund looks like it's good to next june than one so states that are working on projects right now to the hefty stop on november 20 if a bill doesn't get to the president and gets signed? >> guest: it's not that the state that this topic is more that the department of transportation will no longer be able to process aid payments because if they need, to states because congress has given him
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authority to do that be on that point. it's complicated. i don't think there's any question that congress will do something by then in order to prevent a shutdown in a. nobody wants to see that they always have the votes for that are but the question is can they resolve their differences in conference and get a final bill out to the president before then? that's their goal. we will see. >> host: let's take some calls answer with kathy in cuyahoga falls ohio. independent line. comic thanks for taking my call. i was wondering can you guys tell me if there's any effort in the bill as it is right now to build land bridges for wildlife to safely cross highways? and if there isn't, does she know of how regular people can try to push to make that happen?
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posted by those the types of things that are funded in these transportation bills? >> guest: i know that has been funded in the past. i don't know whether it's still funded. it could be in this bill but honest i don't know. usually i think it's to the federal highway administration. it's a small amount of money relative overall. there is some funding in the bill for sort of transportation alternatives, and maybe that might fall under there. that's something that's been criticized by a number of republicans in congress who feel that that's not true transportation and, therefore, shouldn't be in the bill. of course, a lot of other people support that. >> host: when you look at the 325 from the house and the 350 billion from the senate, when you look at those numbers how much goes into putting down
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roads or improving roads as opposed to come under there's a debate on landscaping yesterday in the house. and maybe mass? >> guest: issues as well? >> guest: in terms of highways versus mass? >> guest: , there's for longtime been a rough division of 80% for surface roadways and so forth, and 20% for? >> guest: . so that's that. the money for what you call decorative stuff is really fairly small and it sounds like landscaping. really a lot of what that is is when you build a highway, all the dirt on the side of the road. it's just a plan plan that and everything so you don't have in a rainstorm you don't have all
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that mud washington on the highway. that's most of what that is. >> host: next call for joan lowy, republican. >> caller: good morning, c-span. two quick questions please. the first one in terms of the percentage of this is a lot of money we're talking about. what percentage goes to administration and overhead? the second question is, during the actual construction projects are the salt prevailing away jobs try to i can answer the second question and that is true that all these are prevailing wage jobs in terms of projects that are funded by big federal government. in terms of whether they are, i forget the first part of the question. >> host: does this funded the department of transportation, how much of the cost is administrative and how much -- >> guest: i don't know.
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i haven't seen anybody explained that. i don't know how much is administrative. >> host: a city where all than it was in the washington area, john is calling in from breeze with pennsylvania other democrat's line. everybody who comes outside of washington tries to go west goes through breeze would at some point i think. >> caller: yes video. and once again i'm calling -- chairman congressman shuster. i follow my congressman's bills tentatively and impartially i have been able to read this one. but a previous bill, almost a third of the highway trust fund spending went to mass transit. and then there was another eight or 12% of the previous bill that went into canals, and they went into funding,


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