An online retailer is being sued after fining a couple $3,500 for a negative review and then dinging their credit score when they didn't pay the fine. The lawsuit, which is seeking damages of at least $75,000, accuses KlearGear.com of defaming customers John and Jen Palmer, inflicting emotional distress, and violating the federal Fair Credit Reporting Act.
"Companies like KlearGear.com that engage in abusive consumer practices need to be deterred," said Scott Michelman, an attorney with the Washington, D.C.-based consumer advocacy group Public Citizen, which is filing the lawsuit on behalf of the Palmers.
John Palmer had purchased a desk toy and a keychain on Kleargear in December 2008, according to the lawsuit. When the order failed to arrive within several weeks, John's wife, Jen Palmer, says she tried to contact the company to find out what happened.
She couldn't contact anyone by phone but she eventually reached a representative by email, who told her the order had never been paid for, the lawsuit claims.
Palmer then posted a negative review of the company on RipoffReport.com, in which she accused Kleargear of having "horrible customer service practices."
"There is absolutely no way to get in touch with a physical human being," the review from February 2009 says.
More than three years later, John Palmer got an email from Kleargear demanding that the review be removed within 72 hours or he would be fined $3,500. The email reportedly cited Kleargear's terms of sale, saying it included a non-disparagement clause that prohibits customers from "taking any action that negatively impacts" the company.
"If the content remains, in whole or in part, you will immediately be billed $3,500.00 USD for legal fees and court costs until such complete costs are determined in litigation," the clause read, according to TechDirt. "Should these charges remain unpaid for 30 calendar days from the billing date, your unpaid invoice will be forwarded to our third party collection firm and will be reported to consumer credit reporting agencies until paid."
Kleargear appears to have removed the clause from its terms of sale within the last couple months but it appeared on the website as recently as August 2013. The lawsuit claims the clause was not included in the terms of sale when the Palmers' order was placed.
When John Palmer explained that he didn't write the negative review, but that his wife had, a KlearGear representative stated in an email that "[i]f you disparaged KlearGear to another person who published negative content, you have still breached the terms of our sales contract," according to the lawsuit.
Jen Palmer contacted RipoffReport to remove her post, but the website told her there is a $2,000 charge for taking down reviews. When the Palmers didn't pay Kleargear the $3,500 fee within 30 days, the company contacted credit bureaus, which dinged their credit score, the lawsuit says.
"The consequences to the Palmers have been quite serious," Michelman said. "They have been denied credit, they have had loans delayed, and through a three-week period in October they had no heat in their home because their furnace broke and they couldn't obtain a loan to purchase a new one."
Business Insider was unable to reach anyone by phone or email at Kleargear.