Commentary

KlearGear's Bad-Review Fee Costs It $300,000

The online retailer KlearGear has been ordered to pay more than $300,000 to John Palmer and Jennifer Kulas, a married couple targeted by the company for posting a bad review of its service.

The order, issued on Wednesday by U.S. District Court Judge Dee Benson in Utah, marks the latest development in a saga that started in December of 2008, when the couple attempted to make a purchase from KlearGear. They said the item they ordered never arrived, prompting Kulas to pan the company on RipoffReport.com.

More than three years later, KlearGear contacted the couple and told them to remove the review or face a $3,500 fee for violating a non-disparagement clause. The site's current terms of sale have language prohibiting customers from “taking any action that negatively impacts KlearGear.com, its reputation, products, services, management or employees.”

The company adds that violations can result in charges for $3,500 “legal fees and court costs.”

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Those terms don't appear to have existed in 2008, when Palmer and Kulas placed the order. But even if they had been on the company's site, it seems extremely unlikely that a court would enforce them.

In any event, Palmer and Kulas didn't remove the review or pay KlearGear its fee. The retailer responded by reporting the couple to at least one credit agency -- effectively destroying their credit. When they complained, KlearGear tacked on an extra $50 dispute fee.

Late last year, advocacy group Public Citizen took up the couple's case. The organization wrote to KlearGear's representative and asked the company to pay $75,000 in damages, for allegedly filing a false report to credit agencies.

When KlearGear failed to respond, the organization sued. KlearGear no-showed in court, and Benson issued a default judgment against the company in May.

This week, Benson awarded damages of 306,750 -- a figure that includes $204,500 in punitive damages.

Collecting the money could prove challenging, especially because KlearGear didn't appear in court. Even so, Scott Michelman, the attorney who represented the couple, said today in a statement that they “feel vindicated” by the award.

He added, “The court sent a strong message that corporate bullying of consumers would not be tolerated.”

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