Public Citizen Suing On Behalf Of Customers Whose Credit Was Ruined By KlearGear's $3,500 'Bad Review' Fee

from the how's-that-plan-to-eliminate-negative-reviews-working-out-now? dept

Tue, Nov 26th 2013 3:59pm — Tim Cushing

KlearGear's decision to charge a customer $3,500 for writing a negative review has finally paid off for the company. Whoever was in charge of inserting a non-disparagement clause into the site's Terms of Sale back in June of 2012 set in motion the worst of all possible scenarios.

KlearGear's reputation is now thoroughly destroyed. Its social media presence has been shuttered. The search results for KlearGear are unflattering, to say the least. The BBB has yanked Kleargear's rating and opened an investigation into its tactics. Its supposed Truste validation is nothing more than a "sticker" applied to the site without the approval of the validation company. As Ken White at Popehat puts it, KlearGear is reaping the whirlwind.

The company was doing $40+ million in sales per year, if this Inc. profile is to be believed. Without reservation, I can say sales have dropped off appreciably in the wake of its stupidity being exposed.

KlearGear has become even more uncommunicative than it was back in 2010, when it decided to wreck a former customer's credit in return for her negative review. Even back then, even before the non-disparagement clause, it was in the wrong. Jen Palmer's (the customer who wrote the review) order never showed up and as she states, it was "impossible" to get ahold of a human being to get this fixed.

The costs of this self-made whirlwind continue to mount. Public Citizen is now suing KlearGear on the Palmers' behalf, seeking monetary damages for the havoc wreaked on the former customers' credit by the company's moronic attempt to extract $3,500 from its detractors.

Public Citizen is representing Jen and John Palmer in seeking redress from KlearGear. Today, we sent this demand letter seeking three actions from KlearGear: first, clearing up John's credit; second, paying $75,000 in compensation for the Palmers' ordeal, which has lasted more than a year; and third, agreeing to stop using this non-disparagement clause to extort money from their customers.

As Public Citizen's blog post points out, efforts to shut down negative reviews are far from rare, even though nearly every incident only garners these censorious entities more negative press.

KlearGear's conduct is part of a troubling trend of businesses trying to deter negative reviews by muzzling their customers. Another example is Public Citizen's case against a New York dentist who tried to make her patients agree, as a condition of treatment, that they would not criticize her. And TechDirt has reported about the use of such a clause in vacation rental agreements.

While a settlement would probably be preferable, it would be interesting to see this run through a trial. For one thing, it would uncover who actually runs KlearGear, something that has been carefully obscured.

Kleargear identifies itself as a division of both Chenal Brands Inc., and Havaco Direct Inc., both business entities based in San Antonio, Tex. The website itself is registered through Domains By Proxy, a GoDaddy.com site that sells private domain hosting and administrative services.

Furthermore, it would possibly shed some light on its decision to drop this catastrophic non-disparagement clause into its Terms of Sale back in 2012. That question certainly deserves an answer, considering all possible outcomes of enforcing the clause are completely negative.

Other companies, who are considering ways to curtail negative reviews, would do well to view this as a cautionary tale. If you're fielding a lot of negative complaints, the issue is very likely with your own company, not the customers airing their grievances on the internet. Fix those problems and save your company. Any attempts to "fix" the complaints will only hurt you more.

Palmer Demand Letter (PDF)Palmer Demand Letter (Text)

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Filed Under: credit scores, non-disparagement, reviews
Companies: kleargear

21 Comments

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madasahatter (profile), 26 Nov 2013 @ 4:16pm

Streisand Effect
KlearGear was better off listening the complaints and fixing their problems. Now they are reaping the Streisand Effect for their heavy handed stupidity.
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Anonymous Coward, 26 Nov 2013 @ 4:41pm

Is This Criminal Fraud?
I don't know why we're even talking about a civil suit here. If he reported a debt that doesn't exist to the credit bureaus we should be talking about criminal wire fraud and a job better left to district attorneys and state attorneys general.
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Anonymous Coward, 26 Nov 2013 @ 4:46pm

Re: Is This Criminal Fraud?
a job better left to district attorneys and state attorneys general

If you leave it to them, you're going to be left waiting a long while.

They appear to have better things to do.

Priorities, priorities�
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Steve Martin, 26 Nov 2013 @ 4:49pm

Is it actually a suit?
The title indicates that Public Citizen actually has sued KlearGear. But so far, all that the article says is that Public Citizen has contacted KlearGear and told them that they would file suit *if* their demands are not met. So I'm thinking there has not yet been a suit filed.
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GeneralEmergency (profile), 26 Nov 2013 @ 4:49pm

As to whom KlearGear's real owners are...
.

...my first guess would be John Steele and Paul Hansmeier.

There's just a perfect kind of symmetry to that answer.

.
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Ace, 26 Nov 2013 @ 5:28pm

Its Fraud all right
And a body can see that in 3 seconds on the Kleargear site which still displays bogus endorsements.

What is REALLY offensive is having 6 censors on Wikipedia zapping every fact for every 1 contributor attempting to put them up. (errr zero contributors)

http://neer-do-well-hall-of-infamey.blogspot.ca/
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Anonymous Coward, 26 Nov 2013 @ 6:11pm

Re: Is This Criminal Fraud?
I don't know why we're even talking about a civil suit here.

Because they they allege that they have been harmed and deserve financial compensation for that harm?

Perhaps there should ALSO be a criminal case, but that doesn't preclude the civil case.
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Jaydee (profile), 26 Nov 2013 @ 6:20pm

Re: Is This Criminal Fraud?
Simply ask any credit reporting agencies to remove it, as you owe nothing on a damages claim if it hasn't been adjudicated.

And under federal law you can instruct collection agencies to stop calling you and you can sue them if they don't.
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ChrisB (profile), 27 Nov 2013 @ 6:32am

KlearGear doing fine ...
They claim on their website they have a "unexpected and sharp increase in recent order volume". I guess bad publicity is good publicity.
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GeneralEmergency (profile), 27 Nov 2013 @ 8:47am

Re: KlearGear doing fine ...
.

...Or an upfront lying excuse for poor customer service and deliberate under-staffing, assuming there actually -is- a staff somewhere.

.
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nasch (profile), 27 Nov 2013 @ 9:53am

Negative complaints
...negative complaints...

[Nicholson]
Is there another kind?
[/Nicholson]
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halcyon, 27 Nov 2013 @ 1:33pm

Where is the clause?
Where is that clause in the Terms? I don't see it on the website.
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jen (profile), 27 Nov 2013 @ 6:27pm

Re: Where is the clause?
the clause was taken down a day or two after the original news story from KUTV2 aired.
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Andrew D. Todd, 28 Nov 2013 @ 7:33am

Why KlearGear Is Being Driven Out of Business
KlearGear is caught in a kind of economic "coffin corner." Amazon is steadily inserting itself as a kind of universal bursar and purchasing agent, building more warehouses with more robots, and the big merchandising companies such as Walmart, Target, etc., are struggling to compete. The same goes for the major internet companies, such as Google and Facebook. Amazon's robots can handle an arbitrary number of different product lines, in quite small quantities, down to even one unit, and can do so at a "wage" of fifty cents an hour. Novelty Goods, Toys, and Gifts, to take one instance, can no longer justify a separate mail-order vendor, any more than they would justify a separate Post Office, or a separate express company, or a separate banking system. Amazon takes goods on deposit, at the seller's risk, and sells and fulfils them. Once a potential customer knows the proper name of something he is buying, he can easily add it to a shipment of household necessaries. The day of the little "buy stuff which anyone could buy, wholesale, and resell it, retail, to customers on the internet, on your own website, with your own VISA merchant account" business is over.

Every manufacturer will have a direct connection with Amazon, and will ask hard questions of anyone who wants a dealership franchise. Specifically, tell us about your walk-in traffic, and why you aren't going to be cannibalizing our 7-11 business, or our Walgreen's business, or our Kroger's business, or our Target business, or our Amazon business, and further be prepared to enter into a performance bond that in the event of your going out of business, unsold inventory will not be sold to a liquidator, or anything like that.

There are a few ways a small mail order/internet vendor can remain viable. He can acquire his inventory "on the scrounge," by visiting garage sales, etc. Consumer protection laws tend to take a stern view of any attempt to impose a contract by stealth on the ultimate consumer, and if something is really well and truly used, the owner is commonly free to sell it for two cents to whoever will haul it away. This method works better for books and other media than it does for most other products. Alternatively, a small mail order/internet vendor can actually manufacture something, and sell it. Outside of the special case of books and other media, Amazon is not, as yet, capable of manufacturing small quantities of this, that, and the other thing. The catch is that a small vendor with an essentially incoherent inventory is not likely to have the equipment and expertise to make anything either.

The kind of "incidents" which KlearGear has been involved in are probably a byproduct of the "coffin corner."

Looking over KlearGear's website, their merchandise seems irretrievably trashy. They invite you to decorate your office cubicle with items saying that you are still five years old. Years ago, when I was a GTF, and had an on-campus office in consequence, I put up a print of _The Man with the Golden Helmet_ (formerly attributed to Rembrandt) on the door, and a print of Vermeer's _Girl with a Pearl Earring_ on the inside wall. I had bought both prints at a sale in the student union building. Nowadays we live in less spacious times, and someone with a modest salary of five or ten thousand dollars doesn't rate an office. The appropriate means to decorate a cube or a locker would be to download the pictures from the internet, and print them off on ordinary paper using an ink-jet printer.

http://en.wikipedia.org/wiki/File:Rembrandt_(circle)_-_The_Man_with_the_Golden_Helmet_-_Goog le_Art_Project.jpg
http://en.wikipedia.org/wiki/Girl_with_a_Pearl_Earring
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fred karmally, 29 Nov 2013 @ 9:05am

Glad
Glad that these frauds are being exposed. Another one is American Access Casualty which has hundreds of complaints on CitySearch. They don't even pay when their customer rear ends your car. Bunch of crooks.
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Paul, 29 Nov 2013 @ 1:56pm

Fine
I was curious who levied the fine and under what authority? I normally associate a fine with some type of court action...
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nasch (profile), 29 Nov 2013 @ 3:20pm

Re: Fine
I was curious who levied the fine and under what authority? I normally associate a fine with some type of court action...

It's a fee; the word "fine" doesn't appear in the story.
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William, 30 Nov 2013 @ 9:40am

KlearGear SUCKS!!!!
I'm going to tell everyone everywhere that KlearGear SUCKS and is a stupid dumb rip off company. Let's see you sue me morons. Don't buy from KlearGear EVER!!!
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Anonymous Coward, 1 Dec 2013 @ 4:14pm

Re: KlearGear SUCKS!!!!
Seems like a low - lower rent Spencer Goods.
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ART CAMACHO, 3 Dec 2013 @ 9:22am

I guess I'll never order anything from klear Gear,they are extortionist
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Jim, 3 Dec 2013 @ 1:11pm

Klear Gear
Despite the Rants, They got away with it. They are still online. They are still processing payments through Paypal. They are still lying. They are still making money. They are still listed by screwgle and bing. They are still hosted by GoDaddy. They still have a Yahoo store site. Hell even Inc raised their rating. Bend over, folks, it's the internet.
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