Court Rules Company Can’t Collect $3,500 “Non-Disparagement” Fee For Negative Online Review

The KlearGear Terms of Sale still have this ridiculous Non-Disparagement Clause that levies a $3,500 penalty against anyone who writes something negative about a purchase on the site.

For months, we’ve been telling you about KlearGear.com, the online retailer that was trying to collect a $3,500 fee from unsatisfied former customers over a negative review because of a “Non-Disparagement Clause” inserted into the site’s Terms of Sale after the customers made the purchase. The customers have been trying to fight the ridiculous anti-consumer fee (which shouldn’t apply to them anyway, as they never agreed to it at the time of purchase), and finally sued the company after having their credit tainted by a bogus debt. Now a federal court has sided with the couple and tossed out the $3,500 fee.

Back in 2012, the customers placed an order for some sort of trinket from KlearGear, but after the purchase never arrived and they canceled their order, they posted a complaint about KlearGear on an online gripe forum.

That’s when KlearGear attempted to charge them a $3,500 fine for posting something negative online about a KlearGear.com purchase.

See, buried deep in the site’s terms of sale is the following:

Non-Disparagement Clause

In an effort to ensure fair and honest public feedback, and to prevent the publishing of libelous content in any form, your acceptance of this sales contract prohibits you from taking any action that negatively impacts KlearGear.com, its reputation, products, services, management or employees.

Should you violate this clause, as determined by KlearGear.com in its sole discretion, you will be provided a seventy-two (72) hour opportunity to retract the content in question. 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. 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.

Thing is, this clause wasn’t put into the KlearGear.com terms until after the purchase was made by the customers. So KlearGear’s attempt to collect — and then send this fake debt to collections and to alert credit reporting agencies about it — was never legal to begin with, argued Public Citizen, which represented the couple in their suit against KlearGear.

And this week, a federal court agreed.

“[The Plaintiff] does not now, and never did, owe KlearGear.com or any other party any money based on KlearGear.com’ s “non-disparagement clause” or any money based on [the Plaintiff's] failure to make any payment allegedly owing under that clause,” reads the summary judgement [PDF] against KlearGear.

The Utah-based court also ruled that KlearGear violated the federal Fair Credit Reporting Act, along with being liable for “defamation, for intentional interference with prospective contractual relations, and for intentional infliction of emotional distress.”

The court still needs to determine how much KlearGear must pay the plaintiffs to resolve the issue, so the story is not done yet.

Sadly, the court ruling does also not put an end to these kinds of clauses.

And anyone who shops on KlearGear.com should be warned in advance that the Non-Disparagement Clause still exists in the company’s Terms of Sale.

But there’s a huge problem with how KlearGear hides these terms.

We went through the process of buying something off the site (though we didn’t actually finalize the transaction). Before sending your payment information, you do have to check a box saying that you agree to the terms:

However, those who click on that link given next to the check box are not actually taken to the Terms of Sale page, but to this Help page, which then contains a link, about three-quarters of the way down the page under the heading of “Chargeback and Dispute Policy.”

So in order to get to the terms, you need to read the site’s Help section, think click again to even get to the Terms, where the Non-Disparagement nonsense is the 12th item on the page.

Just to buy a stupid trinket or Tee you can get from thousands of other sites that don’t have clauses that “ensure fair and honest public feedback” by restricting customers’ right to make factually accurate statements about the company.

We attempted to reach out to KlearGear, but our e-mail was bounced back.

by Chris Morran via Consumerist