KlearGear vs. the First Amendment

Submitted by Charlton Stanley, Guest Blogger

When the public’s right to know is threatened, and when the rights of free speech and free press are at risk, all of the other liberties we hold dear are endangered.
– Senator Christopher Dodd

Utah Federal CourtBack in 2008, John Palmer ordered gifts for his wife, Jen. John ordered from KlearGear, an online retailer located in Michigan. When the merchandise did not arrive, Jen began calling, but got the runaround from KlearGear and the order was canceled. At that point,the frustrated Jen Palmer wrote an account of her negative experiences with KlearGear on the complaint site, Ripoff Report. In describing her frustration with trying to reach somebody at the company to talk to, Jen wrote, “There is absolutely no way to get in touch with a physical human being. No extensions work.”

In 2012, more than four years later, KlearGear notified the Palmers they were being “fined” $3,500 for their negative review. KlearGear warned that unless the bad review was removed from Ripoff Report, they would turn the “fine” over to a collection agency. Ripoff Report makes it clear on their web site that they do not remove negative reviews, but merchants have the opportunity to respond, with their response posted next to the original complaint.

When the unpaid $3.500 was reported as a bad debt to all the credit reporting agencies, the Palmer’s credit rating took a nose dive. They were unable to buy a furnace they needed, they could not finance a car, and were denied other credit, including buying a new home.

KlearGear claimed Palmer had violated their terms of service, which prohibited bad reviews. This is the language on their website which KlearGear said the Palmers violated, justifying their “fine”:

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.

Here, the matter becomes curiouser and curiouser. The management of KlearGear must have forgotten the Wayback Machine. The Wayback Machine never forgets. When TechDirt researched it, they discovered the clause was not there on December 19, 2008 when John Palmer placed his order. Even more curious, if you check their website now, it is nowhere to be found. The clause has been redacted after local television station KUTV reported it.  KUTV news staff tried to contact KlearGear when they were preparing the story, but didn’t have any more luck than Jen Palmer. Report here, with video.

Things get even weirder here. According to news reports, KlearGear variously reported “A”or “B” ratings by the BBB. Then, the BBB and TRUSTe learned KlearGear is using theirs logos on its Website without permission.  Additionally, BBB says KlearGear has a “Not Rated” rating. BBB also has a red-flagged alert on this business.

For a company so cavalier about using other people’s logos, they are certainly protective of their own:

All content included on this site, such as text, graphics, logos, button icons, images, audio clips, digital downloads, data compilations, and software, is the property of KlearGear.com, or its content suppliers and protected by United States and international copyright laws.  The compilation of all content on this site is the exclusive property of KlearGear.com and protected by U.S. and international copyright laws.  All software used on this site is the property of KlearGear.com or its software suppliers and protected by United States and international copyright laws.

It goes on to say:

Copyright Complaints:
KlearGear.com and its affiliates respect the intellectual property of others.

You can scroll to the bottom of their front page and see for yourself.

The Palmers had enough, so now the Public Citizen Litigation Group represents them. Public Citizen attorney Scott Michelman wrote to KlearGear on November 15, giving them until December 16 to retract their demand for money from the Palmers. Since there was no satisfactory response, on December 19, the Palmers filed a lawsuit against KlearGear in Federal Court for $75,000. They are also seeking attorney’s fees and punitive damages.

Attorney Michelman learned even more about the company when he sent the demand letter on November 15. He said, “There are a number of things we’ve either discovered or read about them that make us concerned about what kind of company it is,. Since we’ve sent the demand letter, they appear to have moved within Grandville, Mich., and both locations appear to be nothing more than a mail drop.”

Obviously, if the defendants fail to show up in Federal Court, the Palmers win by default. My question now is whether the defendants even have any assets to seize.

In researching this article, I read that more companies are putting this kind of egregious restriction on speech in the fine print of their Terms of Service. An ominous development.

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