We've written a couple times about the online retailer KlearGear and its stupendously ridiculous policy of inserting a "non-disparagement clause" in its terms of service, which claims that if you say something bad about the company online, it can fine you $3,500
. This is exactly what KlearGeaer attempted to do to John and Jen Palmer. There were all sorts of problems (even beyond the obvious) with this, which we'll get to in a moment. A few weeks ago, we noted that Public Citizen, now representing the Palmers, had issued a demand letter
to KlearGear, demanding that the company clear up the Palmers' credit, which the company had ruined, promise to stop using the non-disparagement clause, and to pay up for the serious difficulties created for the Palmers' by KlearGear's illegal stunt.
Kleargear's response was to ignore the letter.
That was probably a mistake. Public Citizen has now officially sued KlearGear in Utah
, and you should read the full lawsuit
to get a sense of just how terrible and obnoxious KlearGear has been throughout this process. Among the many, many problems with KlearGear's actions are the following:
- The non-disparagement clause didn't even exist when John Palmer placed his order. He ordered in 2008, and it did not appear in KlearGear's terms of service until 2012.
- KlearGear never actually delivered the product that Palmer ordered. The negative review on Ripoff Report appeared to be an accurate complaint about KlearGear's customer service.
- John Palmer, who made the order, was not the same person who wrote the review. That was Jen Palmer, his wife. Even if the clause had been in there and had been binding, it would only have been on John. While KlearGear claims that John telling Jen about the problems still made him liable, that's just crazy.
- Even if the clause had been in there, it's completely unenforceable. You can't bar someone from giving an honest review of your crappy service.
- Palmer explained to KlearGear that Ripoff Report does not allow the removal of reviews, so that demand was impossible.
- KlearGear not only demanded $3,500 and to have the negative review removed, it also told various credit bureaus that John Palmer owed them $3,500 that he wasn't paying, creating a serious credit problem for the Palmers.
- When the Palmers disputed the debt claim with the credit bureaus, KlearGear insisted that the debt was legitimate and added an additional $50, again pointing to their terms of service, which had a "chargeback/dispute policy." Yes, this is adding insult to injury. Not only do they tell credit bureaus of a bogus $3,500 claim based on a bogus unenforceable term in a contract that didn't exist at the time of the failed exchange, but they add to the debt when the Palmers contested it.
I'm going to repeat that last point, because it's what shows how insane all of this really is. KlearGear failed to deliver a product, provided bad customer service, and then three years after all of this, the company added a "non-disparagement clause" to its terms, which neither of the Palmers agreed to. The company used that to demand $3,500 for the accurate review, then reported that bogus "debt" to credit bureaus for an accurate review of the company's own failures, based on an unenforceable term in a contract added years after the events took place. And then... it tried to charge even more when the Palmers fought back against the charge.
As the lawsuit details, the impact on the Palmers' life over a product John ordered which was never delivered, was fairly immense. The unpaid debt on their credit report harmed their credit, made it difficult for them to get a (pre-approved) car loan, likely increased the rate they eventually paid for the loan, meant that American Express refused to grant Palmer a card, and left the couple without heat for three cold weeks, because they were unable to buy a new furnace on credit, after their old one broke. Since then the Palmers have decided not to get a home equity loan to fix up their home, fearing the credit problem, and even though they want to sell their house, they're afraid to even try, given these bogus credit problems.
And KlearGear's response to all of this has basically been to stand by everything it did... and then to disappear when asked to fix it.
We'll see how that plays out in court.