A Utah couple Wednesday filed a federal lawsuit against an online retailer that retaliated against them for posting a negative review by “fining” them $3,500.
Public Citizen, a nonprofit advocacy group, said it filed the suit on behalf of John Palmer and his wife Jennifer Kulas against online retailer KlearGear.com and debt collector Fidelity Information Corp., seeking punitive and compensatory damages.
In the lawsuit, filed in the U.S. District Court for the District of Utah, Public Citizen details the harms caused by KlearGear.com’s allegations that John Palmer owed KlearGear.com $3,500 because his wife Jennifer posted a critical review of the retailer online. When John refused to pay, the company reported the $3,500 “debt” to credit agencies.
“A company may not retaliate against a customer for a critical review by demanding money under a penalty clause in contractual fine print or by wrecking the customer’s credit,” said Scott Michelman, the Public Citizen attorney handling the case.
John attempted to make a small purchase on the KlearGear.com site five years ago, but the order was never delivered and his money was refunded. His wife then wrote a critical review on RipoffReport.com.
Last year the company contacted John and demanded $3,500 claiming that the couple violated a non-disparagement clause contained in the website’s terms of use which prohibited “any action that negatively impacts KlearGear.com [or] its reputation.”
Michelman, however says the non-disparagement clause did not appear in the terms of sale when John did business with the company; it was added more than three years later. And even if it had been present at the time of John’s transaction, the clause would be unenforceable under basic principles of contract law and the First Amendment, Public Citizen says in the suit.
KlearGear.com reported the “debt” to credit agencies, and as a result the couple’s credit was ruined, the suit says.
“The Palmers had a car loan delayed and a credit card denied, and they have been unable to sell their home and purchase a new one. Recently, the family was unable to obtain a loan to purchase a new furnace when their old one broke, leaving them without heat for three weeks,” Public Citizen says in a prepared release.
“KlearGear’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,” John Palmer said in the release. “For weeks, we bundled our son in blankets every night just to keep him warm in his own bedroom. 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.”
Public Citizen says the lawsuit was filed after KlearGear.com ignored a Nov. 25 demand letter sent by Public Citizen on behalf of the Palmers requesting that KlearGear.com contact the relevant credit agencies immediately and inform them that the debt it had reported concerning John was in error. The letter also asked for compensation of $75,000 and permanent removal of the “non-disparagement clause” from its website’s terms of use.
