The KlearGear Controversy

I haven’t had a chance to blog about the case, but I thought I’d note that Public Citizen has gotten involved. Here’s the press release:

Public Citizen Asks Online Retailer To Remedy Its Retaliation Against Customer for Critical Online Review

Company Damaged Customer’s Credit After He Refused Company’s Demand for $3,500 Over Critical Web Posting

Online merchant must retract its reports to consumer credit agencies concerning a phony $3,500 debt it has sought from customer John Palmer since late spring of 2012, Public Citizen wrote the company today in a demand letter.

In December 2008, John attempted to make a purchase on the site, but the order was never delivered. His wife Jen then wrote a critical review on In 2012, the company contacted John demanding $3,500 pursuant to a non-disparagement clause prohibiting “any action that negatively impacts [or] its reputation,” a clause that it claimed was included in its online Terms of Use. However, the website found that this clause did not exist when Jen wrote her review.

The false debt that reported to credit reporting agencies has hounded the family for more than a year. Recently, for instance, the family was unable to obtain a loan to purchase a new furnace when their old one broke, so the Palmers and their three-year-old son were left without heat in October in Utah.

Even if the clause had been on the website at the time of John’s purchase, it would be invalid “because it constitutes unfair surprise in a take-it-or-leave-it contract, and the terms themselves … are so one-sided in their broad, restrictive impact as to oppress an innocent party,” Public Citizen explained in the demand letter. Any attempt to enforce such a clause in court would also violate the First Amendment because John did not voluntarily and knowingly waive his constitutional right. Additionally, the false debt was levied against John, but he did not write the review.

“’s unscrupulous conduct has affected every aspect of our lives, from major financial transactions like financing a new home purchase and a car purchase, to basic needs like heat in our home,” said John Palmer. “We are fighting not only to clear my credit record and obtain compensation for our ordeal but also to make sure that no one else has to go through what we did.”

Today’s demand letter explains that by reporting to one or more credit agencies that John Palmer owed a debt that he did not in fact owe, committed defamation, intentional interference with economic relations, and intentional infliction of emotional distress. By failing to correct the misinformation it sent to credit reporting agencies, also violated the federal Fair Credit Reporting Act (FCRA), for which substantial damages may be awarded.

The Palmers are asking that contact the relevant credit agencies immediately and inform them that the debt it reported concerning John Palmer was in error. They are also asking for compensation of $75,000 and asking that the company agree to remove permanently the non-disparagement clause from its Terms of Use.

If does not agree to these demands, the Palmers plan to file suit.

Read Public Citizen’s letter.

See also this TechCrunch story and this ABC News story.