KlearGear No-Shows Hearing, Reinstates $3,500 Non-Disparagement Clause

from the your-one-stop-shop-for-bullshit-clauses! dept

KlearGear is getting back into the pay-to-complain business. Despite being forced into hiding after news surfaced that it had (fraudulently) attempted to extract $3,500 from a negative reviewer using a bogus non-disparagement clause hidden in its "Terms of Sale and Use," the company continues to limp along, avoiding taking responsibility for its actions.

As KUTV.com notes, the impossible-to-locate representatives of KlearGear were no-shows in court. (h/t to Techdirt reader Howard Robinson)

The court clerk declared kleargear.com to be in default on March 11, 2014. Eight days later, Michelman proposed a default judgment which reads, "kleargear.com is liable to [jen and her husband] for violating the fair credit reporting act, for defamation, for intentional interference with prospective contractual relations, and for intentional infliction of emotional distress."

Michelman told Get Gephardt Thursday that he expects the judge will sign the motion and order kleargear.com to pay restitution to John and Jen.

The proposed default judgment does not say how much kleargear.com will be asked to pay. Rather, Michelman has asked for a future hearing where the judge would determine the penalty. A letter sent to kleargear.com by Michelman before the lawsuit was filed said John and Jen would ask a court to award $70,000.

So, for the want of $3,500 (via a BS clause hidden in the terms of sale and not even active when the suing couple purchased [but did not receive] an item from KlearGear), the company is now potentially out $70,000 (thanks to Public Citizen's efforts on the Palmers' behalf). That's if anyone can get ahold of the company's owners. So far, these principals have managed to avoid being smoked out by the internet heat.

But there's even more to this story. The original non-disparagement clause, which was pulled down shortly after KUTV's Matt Gephardt started asking questions, has now resurfaced. The gotcha clause has been placed back in its original spot in the "Terms of Sale and Use" (albeit under a slightly different url -- "termsofuse1," rather than "termsofuse").

Also making a return is KlearGear's horrible "chargeback" policy, which similarly disappeared briefly along with the non-disparagement clause.

[S]hould Klear Gear receive a chargeback (a sale reversal that occurs when a customer contacts his or her credit card-issuing bank or credit card company to request a refund for any part of a purchase that they or someone else made on their credit card) or other reversed charge from a third party (e.g., PayPal), credit card company or bank on your behalf before Klear Gear has been given a chance to resolve the issue as provided in this section, Klear Gear has the right to collect on the shipped products or rendered services and any fees associated with those disputes.

Klear Gear charges a $50.00 Dispute Fee per above-described Dispute should KlearGear.com not be given an opportunity to resolve any dispute as provided in this section, and the offending customer's personal information (with the exception of sensitive payment method details) will be provided to BadCustomer.com to limit the customer's ability to purchase from other retailers and service providers. The Dispute Fee is not refundable, even if Klear Gear wins your dispute or if you later cancel your dispute. By making a purchase through KlearGear.com you expressly authorize KlearGear.com to charge to the credit card you have provided to purchase the goods or services in dispute.

If Klear Gear is unable to charge the Chargeback against this credit card, Klear Gear shall have the right to otherwise collect the Dispute Fee from you. If Klear Gear is unable to collect the aforementioned Dispute Fee within 30 days of first attempting to charge you under this agreement, Klear Gear will forward your account to our external collections agency and assess an additional $500.00 Collection Fee. The original Dispute Fee and Collection Fee are subject to 2% monthly interest until the balance is paid in full including associated collection fees, legal fees, and costs of court as assessed separately by our collection firm. As a customer of KlearGear.com, you hereby expressly agree to these Terms.

Not only is this a lousy way to treat customers, it's an absolutely abhorrent way to "provide" customer service. Not only will KlearGear hit you with an immediate $50 charge, it will forward this charge to a collection agency within 30 days and tack $500 on top of it. As if the pocketbook hit weren't excessive enough, the company will also spitefully drag your name through the mud via Badcustomer.com should you have the gall to dispute a charge. The use of Badcustomer.com points to more disreputable actions on Kleargear's part. The whole clause has been reinstated, apparently blissfully (or evilly) unaware that the website was shuttered by the FTC in 2011, after being found guilty of participating in a "cyberbullying billing scam" that "siphoned $275 million" from credit card users' accounts over a period of 4 years. I guess if you're a bullying company, you partner with other, equally-bullying "colleagues."

There's a bit of history to this policy as well. For the first few years of business, neither of these godawful clauses existed. KlearGear ran like a normal, reputable business. The $50 fee/chargeback policy didn't show up until May 2007. In July 2007, the policy remained the same, but the wording now referred to a company called "Havaco Direct" which had the "right" to hit customers with a $50 chargeback fee. By October, "Havaco Direct" had vanished from the policy's wording.

It wasn't until December of 2009 that KlearGear threatened to notify Badcustomer.com about customers who dared to exercise a chargeback. It wasn't until June 2010 that it added the $500 "collection fee." Syncing this timeline up with KlearGear's BBB troubles is enlightening.

By May of 2010, KlearGear was sporting a gaudy "F" at the Better Business Bureau, the same entity that has given a terrorist organization an "A" simply because it followed all the rules. This suggests that KlearGear's customer service has been abysmal for quite some time. (The BBB site notes that 95 of 123 complaints over the previous three years had gone unanswered by the company.) As the chargebacks and complaints mounted, the company apparently decided to address the issue by making it financially unwise to dispute charges and, after being outed in 2012 by the BBB for fraudulently awarding itself an "A" on its website, it added the non-disparagement clause (in June of 2012) as further disincentive for unhappy customers to make their complaints public. KlearGear was stripped of its BBB accreditation in November of 2012.

Now, with its failing to show up in court and having reverted to its customer-punishing ways, KlearGear appears to be more than happy to take money from unwitting chumps and have every incentive not to take care of these blissfully ignorant customers. Why fulfill an order when you can collect anywhere from $50 to $3,500 for treating them poorly?

With its nonexistent staff, numerous address changes and unwillingness to confront any of these issues, its bizarre, abusive "terms of sale" seem to indicate the owners (whoever they are) are willing to run this business into the ground and walk away from the wreckage. Trying to apply logic to its business practices leads one to speculate that it's actually not an ignorant man's ThinkGeek, but rather an elaborate front for something shadier, like money laundering.

KlearGear very likely isn't a front, but rather, a business run by combative people with lousy business acumen and even lousier customer service skills. It's one thing to take someone's money while burdening them with bogus (and supposedly binding) clickwrap Terms of Sale. It's quite another to actually fulfill your end of the bargain and provide them with their purchased items.

Until someone actually outs those responsible for this debacle d/b/a KlearGear, about all anyone can do is spread the word about its abhorrent policies and hope that no one they know is putting their money into clearly undeserving pockets.

Filed Under: default, non-disparagement clause
Companies: kleargear

Collections Company Named In KlearGear Lawsuit Dismissed After Reporting $3,500 Charge Was 'Erroneous'

from the perhaps-the-first-time-a-collections-agency-has-received-positive-attention dept

A little bit of good news has made its way out of the KlearGear debacle. (Quick recap: tech tchotchke store KlearGear screws up order, customer writes negative review, KlearGear bills her $3,500 for violating an extortionate "non-disparagement clause" [which wasn't even in force when it screwed up her order] and then sends that bill to collections, thus screwing up her credit record.)

Scott Michelman of Public Citizen, which is suing KlearGear on the customer's (Jen Palmer) behalf, reports that one of the defendants (Fidelity Information Corp.) has fixed its contribution to Jen Palmer's woes.

Our suit also named the debt collector Fidelity Information Corp., who by this point owned the debt. Now Fidelity has done an independent review of the case and reported to the credit agencies that the debt was erroneous. So the Palmers have a measure of relief – the KlearGear debt is off John’s credit report, finally, after 18 months. Today the Palmers voluntarily dismissed Fidelity from the lawsuit.

That's good news for the Palmers, whose credit was damaged enough by KlearGear's fraudulent tactics that it prevented them from getting a loan to purchase a new furnace when theirs broke, as well as hampering their efforts to buy a new home.

That just leaves KlearGear, which has yet to respond to the lawsuit Public Citizen filed more than two months ago. KlearGear's social media accounts remain shuttered and silent. The company, however, remains open for business, however, with whoever's behind it presumably revising future earning estimates.

Filed Under: collections, jen palmer, public citizen, review, scott michelman
Companies: fidelity information corp, kleargear

KlearGear Sued For Destroying The Credit Of A Couple Who Wrote A Negative Review

from the disparage-that dept

We've written a couple times about the online retailer KlearGear and its stupendously ridiculous policy of inserting a "non-disparagement clause" in its terms of service, which claims that if you say something bad about the company online, it can fine you $3,500. This is exactly what KlearGeaer attempted to do to John and Jen Palmer. There were all sorts of problems (even beyond the obvious) with this, which we'll get to in a moment. A few weeks ago, we noted that Public Citizen, now representing the Palmers, had issued a demand letter to KlearGear, demanding that the company clear up the Palmers' credit, which the company had ruined, promise to stop using the non-disparagement clause, and to pay up for the serious difficulties created for the Palmers' by KlearGear's illegal stunt.

Kleargear's response was to ignore the letter.

That was probably a mistake. Public Citizen has now officially sued KlearGear in Utah, and you should read the full lawsuit to get a sense of just how terrible and obnoxious KlearGear has been throughout this process. Among the many, many problems with KlearGear's actions are the following:

1. The non-disparagement clause didn't even exist when John Palmer placed his order. He ordered in 2008, and it did not appear in KlearGear's terms of service until 2012.
2. KlearGear never actually delivered the product that Palmer ordered. The negative review on Ripoff Report appeared to be an accurate complaint about KlearGear's customer service.
3. John Palmer, who made the order, was not the same person who wrote the review. That was Jen Palmer, his wife. Even if the clause had been in there and had been binding, it would only have been on John. While KlearGear claims that John telling Jen about the problems still made him liable, that's just crazy.
4. Even if the clause had been in there, it's completely unenforceable. You can't bar someone from giving an honest review of your crappy service.
5. Palmer explained to KlearGear that Ripoff Report does not allow the removal of reviews, so that demand was impossible.
6. KlearGear not only demanded $3,500 and to have the negative review removed, it also told various credit bureaus that John Palmer owed them $3,500 that he wasn't paying, creating a serious credit problem for the Palmers.
7. When the Palmers disputed the debt claim with the credit bureaus, KlearGear insisted that the debt was legitimate and added an additional $50, again pointing to their terms of service, which had a "chargeback/dispute policy." Yes, this is adding insult to injury. Not only do they tell credit bureaus of a bogus $3,500 claim based on a bogus unenforceable term in a contract that didn't exist at the time of the failed exchange, but they add to the debt when the Palmers contested it.

I'm going to repeat that last point, because it's what shows how insane all of this really is. KlearGear failed to deliver a product, provided bad customer service, and then three years after all of this, the company added a "non-disparagement clause" to its terms, which neither of the Palmers agreed to. The company used that to demand $3,500 for the accurate review, then reported that bogus "debt" to credit bureaus for an accurate review of the company's own failures, based on an unenforceable term in a contract added years after the events took place. And then... it tried to charge even more when the Palmers fought back against the charge.

As the lawsuit details, the impact on the Palmers' life over a product John ordered which was never delivered, was fairly immense. The unpaid debt on their credit report harmed their credit, made it difficult for them to get a (pre-approved) car loan, likely increased the rate they eventually paid for the loan, meant that American Express refused to grant Palmer a card, and left the couple without heat for three cold weeks, because they were unable to buy a new furnace on credit, after their old one broke. Since then the Palmers have decided not to get a home equity loan to fix up their home, fearing the credit problem, and even though they want to sell their house, they're afraid to even try, given these bogus credit problems.

And KlearGear's response to all of this has basically been to stand by everything it did... and then to disappear when asked to fix it.

We'll see how that plays out in court.

Filed Under: credit, jen palmer, john palmer, non-disparagement
Companies: kleargear

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

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.

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