Utah couple seeks relief after credit ruined over “non-disparagement” clause in a website’s fine-print

Five years ago, John Palmer ordered Christmas gifts online from a web merchant called KlearGear.com. When the gifts didn’t come and John’s attempts to contact KlearGear were unsuccessful, his wife Jen posted a negative review on RipoffReport.com. In 2012, the Palmers received a demand from KlearGear for $3500. According to KlearGear, the Palmers violated a “non-disparagement clause” in the site’s Terms of Use that prohibited users from taking any action that negatively impacts KlearGear.com or its reputation, on pain of a $3500 fine. But this prohibition didn’t appear in the Terms when John Palmer used KlearGear's website back in 2008, and even if it had, businesses aren’t allowed to enforce outlandish terms like this one in their fine print.

When the Palmers wouldn’t pay, KlearGear reported the supposed “debt” to the credit agencies, and has refused to remove it. More than a year later – after the Palmers have been turned down for credit, had their car loan delayed, and worst of all went without heat in their home for three cold weeks this fall after their furnace broke and the Palmers couldn’t get a loan to pay for a new one – this phony debt still mars John Palmer’s credit. Now they are hoping to move, but this debt is a continuing obstacle to selling their home and buying a new one.

Public Citizen is representing Jen and John Palmer in seeking redress from KlearGear. Today, we sent this demand letter seeking three actions from KlearGear: first, clearing up John's credit; second, paying $75,000 in compensation for the Palmers' ordeal, which has lasted more than a year; and third, agreeing to stop using this non-disparagement clause to extort money from their customers.

KlearGear's conduct is part of a troubling trend of businesses trying to deter negative reviews by muzzling their customers. Another example is Public Citizen's case against a New York dentist who tried to make her patients agree, as a condition of treatment, that they would not criticize her. And TechDirt has reported about the use of such a clause in vacation rental agreements.

As our letter explains, KlearGear's actions violate state tort law and the federal Fair Credit Reporting Act. If KlearGear refuses to comply, we'll file suit to enforce the Palmers' rights and send a message to unscrupulous corporations that they cannot muzzle their customers, extort money from them when they post critical reviews, or ruin their credit when they refuse outragous demands for payment.

0 thoughts on “Utah couple seeks relief after credit ruined over “non-disparagement” clause in a website’s fine-print

  1. andrews says:

    For some reason, the statute does not appear to allow a private cause of action under 1691s-2(a), which would have been the more obvious path. Based on the facts stated in the letter, it seems certain that Kleargear knew that their reports were untruthful.
    Thanks, Pub Cit, for taking on a case that clearly needs to be taken. Probably the rest of us come out better if Kleargear determines to fight, since we might get some case law out of it. We’ll also get a good example, what I like to think of as “heads on pikes” to warn other potential bandits.

  2. James Macpherson says:

    Great work! With all the negative media reports, I can’t see KlearGear surviving this debacle – which should serve as the perfect warning to other companies attempting to enforce a “non-disparagement clause.”

  3. M Jackson says:

    When did freedom of speech have such a HIGH PRICE TAG on your thoughts and opinions of that particular company? I would gather a petition for those to sign and send to White House; city officials and anyone else that could help me turn this around for someone.
    I pray that the Palmer’s be blessed with 1/2 million or million dollar lawsuit and win so that they can make example out of Kleargear and anyone that wants to follow in their lane. Silly retailers ‘TRICKS ARE FOR KIDS”

  4. Stephen says:

    The greatest part of me wants to see this resolved for the Palmers as quickly as possible.
    Then there’s this small vindictive part of me that wants to see this go to trial so that PC can thoroughly curb-stomp these KlearGear clowns into legal oblivion.

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