The case began back in 2010 when a former customer, Jen Palmer, wrote a negative review of the company after she never received her order of Christmas presents. Despite the failed delivery, KlearGear went ahead and processed payment, leading Palmer to draft a scathing review on a consumer complaint website, RipoffReport.com.
So what did the non-disparagement clause say? The language has been released and it says that all users agree to avoid taking “any action that negatively impacts KlearGear.com, its reputation, products, services, management or employees.” Should a user violate the agreement, KlearGear claims that it is authorized to charge the customer a $3,5000 fee. Should the amount go unpaid for 30 days, the company says it will forward the bill to a third party collection company and report the bad debt to credit reporting agencies.
That is precisely what happened in Palmer’s case, with KlearGear wreaking havoc on the couple’s credit. The Palmers never paid the money and KlearGear turned the matter over to a debt collector who then harassed the Palmers and dinged their credit rating. With the help of Public Citizen, a consumer advocacy group, the Palmers have now filed suit against KlearGear asking for compensation for the company’s attempt to extort money from unhappy customers.
Experts say that the attempt by the company to protect its online reputation is not new. Previous lawsuits have been filed against companies such as vacation rental agencies and even a dentist who tried to get customers to agree to similar non-disparagement clauses. Companies that are considering taking similar action should view the KlearGear case as a cautionary tale. Rather than try and force users to stay silent about problems, companies are far better off taking time to correct issues and improve customer service rather than trashing the credit of already unhappy customers.