This Company Lost $300k Trying to Bully Customers Who Wrote Bad Reviews

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The now infamous case of KlearGear.com’s corporate bullying tactics has been settled in a U.S. District Court in Utah, with Judge Dee Benson awarding John and Jen Palmer $306,750 ($102,250 in compensatory damages and $204,500 in punitive damages) against the online retailer.

The case dates to 2008 and involves KlearGear’s attempts to enforce its “non-disparagement clause,” a shrewd but completely arbitrary and indefensible bit of legal fine print still to be found (as of this writing) in the company’s terms of use. The clause, which KlearGear customers ostensibly agree to without reading, grants KlearGear immunity to any online criticism by its customers–it “prohibits you from taking any action that negatively impacts KlearGear.com, its reputation, products, services, management or employees.”

And what’s KlearGear’s remedy if you don’t comply?

“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.”

After the Palmers published critical reviews of their experience with the company and refused to take them down, KlearGear went beyond “scare tactics” and effectively destroyed the couple’s credit. According to their attorneys,

“As a result of KlearGear.com’s actions, the Palmers lost credit opportunities; suffered anxiety, fear and humiliation; and spent weeks without heat in their home for themselves and their 3-year-old son when their furnace broke and they were unable to obtain a loan to replace it.”

KlearGear apparently never responded to the suit or showed up in court. As to whether the Palmers will ever collect their $300k, who knows. But the message from at least one judge in Utah is clear: as a business owner, you can’t silence critical customers by asserting absurd contract terms or bullying them–that’s bound to backfire. You’ve got to find a better way.