KlearGear update: debt collector agrees that “non-disparagement clause” debt is void

We don’t often have occasion to praise debt collectors on this site, so it’s worth taking note when a debt collection company does the right thing.

As many of you will remember from previous posts (see here and here), an online retailer called KlearGear tried to extort $3500 from its customer John Palmer because his wife Jen criticized the company online; when John refused to pay, KlearGear reported the supposed “debt” to the credit agencies, ruining John’s credit. The claimed basis for the “debt” was entirely bogus: it was based on a “non-disparagement clause” that the company tried to impose on John years after it did business with him and which would be unenforceable anyway. In December, Public Citizen sued KlearGear on behalf of the Palmers.

Our suit also named the debt collector Fidelity Information Corp., who by this point owned the debt. Now Fidelity has done an independent review of the case and reported to the credit agencies that the debt was erroneous. So the Palmers have a measure of relief – the KlearGear debt is off John’s credit report, finally, after 18 months. Today the Palmers voluntarily dismissed Fidelity from the lawsuit.

Of course this doesn’t end the case against KlearGear, which still must answer for the year and a half during which the Palmers had applications for credit delayed or denied, had to delay trying to sell their home and buy a new one, and were without heat in their home for three cold weeks in October because they couldn’t get credit to buy a new furnace when their old one broke – all on account of the unfounded credit report from KlearGear. We’re now waiting for KlearGear to respond to our complaint.