Appeals Court Shoots Down The Unconstitutional 'Non-Disparagement' Clauses Baltimore Attaches To Lawsuit Settlements

from the court-says-it-won't-be-a-bagman-for-hush-money dept

When the City of Baltimore agreed to settle with a victim of police brutality, it inserted the usual clauses that come with every settlement. There was the standard non-admission of wrongdoing, along with a "non-disparagement" clause the city's attorney told courts was used "in 95% of settlements" to prevent those being settled with from badmouthing the entity they sued.

Ashley Overbey received a $63,000 settlement from the city for allegations she was beaten, tased, verbally abused, and arrested after calling officers to her home to report a burglary. When a local newspaper published a story about the settlement, the City Solicitor chose to disparage Overbey by saying she was "hostile" when the police arrived at her home. As the comments filled up with invective against Overbey, she showed up in person to fire back at her detractors, claiming the police had been in the wrong and detailing some of the injuries she suffered.

The City -- which had chosen to skew public perception against Overbey by commenting on the settlement -- decided Overbey's defense of herself violated the non-disparagement clause. So, it clawed back half of her settlement -- $31,500 -- for violating its STFU clause.

Overbey sued again, claiming this clause violated her First Amendment. Now, seven years after police showed up at her home and treated like the perpetrator -- rather than a victim -- of a crime, the Fourth Circuit Court of Appeals has ruled [PDF] these non-disparagement clauses are unconstitutional bullshit.

The City argued Overbey's acceptance of the clause was actually an action of free expression. By opting for a payout, she was (and I am quoting the City here) "exercising her right not to speak in exchange for payment." Alternatively, it argued that even if it was an unconstitutional waiver of rights, the court has no reason to intercede and nullify the clause.

The court agrees that it's a waiver of rights, but disagrees about what it's allowed to do about it:

We hold that the non-disparagement clause in Overbey’s settlement agreement amounts to a waiver of her First Amendment rights and that strong public interests rooted in the First Amendment make it unenforceable and void.

It goes on to point out that the government has no business compelling speech -- i.e., violating someone's decision to not speak about something. But that's not what's going on here. The clause penalizes settlement recipients for choosing to speak, which is definitely not Constitutional.

Overbey’s promise not to speak about her case cannot be fairly characterized as an exercise of her right to refrain from speaking, because none of the interests protected by the right to refrain from speaking were ever at stake in this case. No one tried to compel Overbey to make speech she did not want to make; no one tried to punish Overbey for refusing to say something she did not want to say. Instead, Overbey agreed, on pain of contractual liability to the City, to curb her voluntary speech to meet the City’s specifications. In doing so, she waived the First Amendment protections that would have otherwise shielded her speech from government sanction.

While it is possible for people to voluntarily waive their rights in certain situations, the discussion of a settled lawsuit isn't one of these situations. Especially not when it deals with issues of considerable public interest, like allegations of police misconduct and abuse. The clause inserted into settlement agreements also drives a wedge between public agencies and the public they serve, contributing to the omnipresent distrust. In a case like this, the only purpose the clause serves is to silence speech the government doesn't like.

Standing shoulder to shoulder with the citizenry’s interest in uninhibited, robust debate on public issues is this nation’s cautious “mistrust of governmental power.” Citizens United, 558 U.S. at 340. This mistrust is one of the “premise[s]” of the First Amendment, id., and we think it well-warranted here, because the non-disparagement clause is a government-defined and government-enforced restriction on government-critical speech. Indeed, when the government (1) makes a police-misconduct claimant’s silence about her claims a condition of settlement; (2) obtains the claimant’s promise of silence; (3) retains for itself the unilateral ability to determine whether the claimant has broken her promise; and (4) enforces the claimant’s promise by, in essence, holding her civilly liable to itself, there can be no serious doubt that the government has used its power in an effort to curb speech that is not to its liking.

That unconstitutionality voids the clause.

Accordingly, we conclude that enforcement of the non-disparagement clause at issue here was contrary to the citizenry’s First Amendment interest in limiting the government’s ability to target and remove speech critical of the government from the public discourse.

The court has zero patience for the City's exhausting arguments about how unfair this is to the City:

As the City would have it, Overbey “sold her [speech] rights, with an option to buy them back, which she exercised, and now she has [her rights] again.” Id. at 39. Essentially, the City argues that half of Overbey’s settlement sum was earmarked for her silence, and that it would be unfair for Overbey to collect that half of her money when she was not, in fact, silent. When the second half of Overbey’s settlement sum is viewed in this light, it is difficult to see what distinguishes it from hush money. Needless to say, this does not work in the City’s favor. We have never ratified the government’s purchase of a potential critic’s silence merely because it would be unfair to deprive the government of the full value of its hush money. We are not eager to get into that business now.

The City will now have to give back the other half of Overbey's money. You can't beat the hell out of the First Amendment and expect to cash out. Litigants in Baltimore -- and elsewhere in the circuit -- have been freed to discuss the details of their cases in public without fear of reprisal. Hopefully, this will reduce the percentage of settlements with gag orders from 95% to 0% very quickly.

Filed Under: 1st amendment, 4th circuit, ashley overbey, free speech, non-disparagement

Hotel That Charged Guest $350 For A Negative Review Now Facing A Lawsuit From State Attorney General

from the when-has-this-EVER-worked? dept

The American Dream: own your own business... be your own boss... run your reputation into the ground... charge people's credit cards $350 for negative reviews... get sued by the government. Welcome to Nashville, Indiana, home of the Abbey Inn, whose absentee ownership, lack of on-duty staff, and hidden clauses have led to a precipitous decline in brand health, along with the opportunity to defend itself against a lawsuit brought by the state's attorney general.

It all started with hotel guest Katrina Walker's disastrous stay at the Abbey Inn.

The hotel room wasn’t just dirty. It was “a nightmare,” the guest said.

The air smelled like sewage. Hair and dirt covered the bed sheets, as if the linens hadn’t been cleaned after the last guests had left the Abbey Inn & Suites room that Katrina Arthur and her husband were renting in Nashville, Ind in March 2016. The air conditioner and shower in the room didn’t work right, either, Arthur told WRTV.

“We were just wanting to get away and have some alone time,” Arthur told the TV station. “It looked really pretty on the website.”

Walker left a negative review of Abbey Inn after an email from the hotel asked her to submit a review. This was followed by a (bogus) legal threat from someone who should definitely know better.

Attorney Andrew Szakaly, who owns the hotel, wrote a letter to Arthur on April 2, 2016 telling Arthur that her negative review included “false statements” that had caused “irreparable injury” to his business, according to Indiana’s attorney general.

If Arthur didn’t take down the negative review, Szakaly threatened to file a libel lawsuit against her, according to the attorney general’s office.

Andrew Szakaly isn't just an attorney and the now-former owner of the Abbey Inn. At the point this legal threat occurred, Szakaly was also the attorney for the town of Nashville. At this point, he's moved on to become the county's chief deputy prosecutor. He's also not willing to answer questions about the problems at Abbey Inn that occurred while he owned the business. He's also nuked his own site, which had his phone number and email address. But it lives on at the Internet Archive, even if calls and emails are going unanswered.

He will likely have to provide some answers. After sending out the bogus legal threat, Szakaly billed Walker $350 for the negative review, citing a clause in Abbey Inn's guest policy. Walker claims she never saw anything in the copy of the guest policy she received at the hotel. The clause also isn't posted anywhere in the business where guests can view it. It can be found in archived snapshots of the Inn's website -- which has also been nuked following negative press coverage.

Now, Indiana's state attorney general is taking the business to court. The complaint [PDF] (h/t Cyrus Farivar) lists dozens of things the Abbey Inn did wrong, on top of the $350 charge for "disparaging" an already-questionable hotel.

Abbey Inn Suites maintains an overnight phone number for times when an employee is not available on-site to address consumer issues, but signs in each guest room state a consumer must not call overnight phone number unless there is an emergency. The signs further state if a consumer calls the overnight phone number and there was not an emergency, Abbey Inn Suites will charge the consumer in the amount of $100.00.

[...]

During her stay, Ms. Arthur, experienced issues with a sewage smell in her room, issues with water pressure, problems with the air conditioner, and an unkempt room.

Ms. Arthur attempted to notify Abbey Inn Suites management of the issues, but there was no employee on site and her calls to the after-hours phone number went unanswered.

There was no employee at the front desk when Ms. Arthur checked out on March 13, 2016, to whom she could direct a complaint about the issues encountered during her stay.

This last part is especially important because it gives guests no other option but to "violate" the bogus clause in the guest policies that they never see [emphasis added]:

Guests agree that if guests find any problems with our accommodations and fail to provide us the opportunity to address those problems while the guest is with us, and/or refuses our exclusive remedy, but then disparages us in any public manner, we will then be entitled to charge their credit card an additional $350 damage. Should guest refuse to retract any such public statements legal action may be pursued.

The lack of staff makes it all but impossible for issues to be resolved before the guest leaves.

The attorney general accuses the business of violating state deceptive practices laws with its non-disparagement clause. The office seeks an injunction and fines of $5,000 per violation. As the complaint points out, the guest policy went far beyond discouraging negative reviews. It also prevented consumers from bringing grievances against the Inn.

The Policy also forces consumers to accept the Defendant's final and binding "exclusive remedy" to resolve any situation or issue, regardless of what that remedy entails and whether it actually resolves the situation or issue to the consumer's satisfaction.

[...]

The Policy not only attempted to limit negative online reviews, thus improperly shielding the Defendant from the consequences of providing consumers with a negative experience or unsatisfactory customer service during their stay, but would also prohibit a consumer from filing a consumer complaint with the Attorney General or Better Business Bureau, filing a lawsuit, or even a police report, as all could be considered a "disparagement"
in a "public manner."

The Abbey Inn's reputation is now destroyed, thanks to a clause inserted by the attorney/owner who also happens to hold a government job as a prosecutor. Hopefully, this all lands in the lap of Brown County Chief Deputy Prosecutor Andrew Szakaly.

Filed Under: andrew szakaly, free speech, nashville, non-disparagement, reviews, tennesee
Companies: abbey inn & suites

Home Security Company Says No One Linking To Its Website Is Allowed To Disparage It

from the lol-no dept

With a federal law in place forbidding this sort of stuff, and an internet full of documentation detailing just how badly things go for companies that institute these policies, why on earth would ADT Security add this clause to its Terms of Use?

For those of you who can't see the tweet, soon-to-be-former ADT customer scriptjunkie has been informed via dialog box ADT's Terms of Use have changed. ADT's Terms of Use contain a Streisand Precursor: if you link to ADT's site, you promise not to do several things, including:

Will not disparage ADT, ADT's products or services, or any of ADT's affiliates or their products or services

This isn't even legal in this day and age, but hiding it in a bunch of words users will likely never read is a great way to fly under the federal law radar. This, of course, only lasts until someone points it out on the internet and, while linking to ADT's site, points out the clause is stupid, the company is stupid for deploying it, and the company's lawyers are just as stupid for suggesting it/signing off on it.

To be fair, ADT's stupid non-disparagement clause isn't part of the update scriptjunkie received. The moronic "promise" it extracts from site linkers dates back to at least 2014. It predates the federal law banning these clauses, which makes its pre-2016 existence somewhat explicable. But that doesn't explain why it hasn't been removed to make the Terms of Use federal law-compliant.

Considering the amount of effort it would take (next to none) to remove this from the site's Terms of Use, its continued existence is perplexing, especially in light of ADT's repeated promise to remove the clause. At the time of this writing, more than 16 hours have passed since ADT promised to remove it and the clause still exists on the Terms of Use page. Even more perplexing is ADT's explanation/apology, which is actually neither.

We also value your honest opinion and have built our company around implementing our customers' feedback. The non-disparagement clause you are referencing only applies to linking to our website and is not a condition of service or using ADT.com.

While it's nice to know ADT isn't preventing people from disparaging the company without linking to its site, trying to prevent them from doing so while linking isn't any better. Review sites tend to provide links to company websites, making third-party reviews a potential violation of this clause.

But even if we take ADT's explanation at face value, we're still left with its questionable decision to insert this language anywhere in any explicit or implicit agreement with site visitors and/or customers. No business should ever take this indefensible position, especially not after it's been made statutorily explicit these agreements are considered invalid -- and illegal -- by the federal government.

Filed Under: home security, non-disparagement, reviews
Companies: adt

Law Passed To Protect Customers From Non-Disparagement Clauses And Other Ridiculous Restrictions

from the back-to-bogus-libel-lawsuits-then,-I-guess dept

Sitting on the president's desk is a bill [PDF] that will finally prevent companies from tying customers up with restrictive contracts at the point of purchase -- including forbidding the insertion of non-disparagement clauses. The bill is called the Consumer Review Fairness Act, but it might as well be called the KlearGear Act, after the infamous tech toy also-ran that gained international notoriety after it ran a customer's credit rating into the ground attempting to collect a $3,500 fee for violating a non-disparagement clause it inserted into its Terms of Use after the customer had already posted her negative review.

There are any number of existing applications for the bill once signed into law. Companies are still including non-disparagement clauses in contracts, despite there being ample evidence all it really does is generate massive amounts of disparagement from parties not bound by the contractual language. It's basically a pre-emptive federal anti-SLAPP law narrowly focused on protecting consumers from litigious companies who feel the "service" part of "customer service" involves a process server. (That being said, there's nothing stopping companies from filing bogus libel lawsuits over negative reviews -- one of many reasons there needs to be a federal anti-SLAPP statute.)

But that's not the only thing the law will prevent. The language will also keep companies from placing a bunch of restrictions on customers as a thank you gift for choosing to do business with them. Paul Alan Levy of Public Citizen points to another all-too-frequent abuse of customers this law will address.

Readers of this blog may recall an article that I posted in late September, taking issue with a proposed contract that the local professional soccer team has transmitted to season ticket holders who are in the process of renewing their season tickets for the coming season. My concern that the contract includes language in which fans waive the right to post “in any media any description, account, picture, video, audio or other form of reproduction of any D.C. United game or any surrounding activities.” Regrettably, despite many fans having objected to the proposed contract, to the extent of telling team sales people that they won’t be renewing if signing this contract is required, and even though the team tried to deflect the adverse coverage by saying that its lawyers would be looking at possible changes to the contract language. However, late last week the team sent out the same contract for signature, and told me privately that the lawyers had decided not to make any changes because the language is “industry standard.”

Nothing says "thanks for supporting our team" like "shut up and stop talking about us." DC United wants to retain strict control of its social media presence, apparently feeling that any "social" aspect should be solely restricted to the official channels. With the new law in place, the ridiculous "industry standard" will no longer be legal. Presumably, this also means it will no longer be the "industry standard."

Levy points out that the law has received the most attention for its banning of non-disparagement clauses, but it's also written to address this sort of contractual overreach.

[I]t forbids a form contract that “prohibits or restricts the ability of an individual who is a party to the form contract to engage in a covered communication,” Section 2(b)(1)(A), and defines “covered communication” to include any “ written, oral, or pictorial review, performance assessment of, or other similar analysis of . . . the goods, services, or conduct of a person by an individual who is party to a form contract.” Section 2(a)(2). The DC United contract that forbids fans from posting written descriptions or pictures of a game (that is, a review or performance assessment of the team’s conduct) is squarely within the law’s prohibition.

While companies should take care to protect their intellectual property and reputations, this can all be accomplished without forcing customers to accept ridiculous restraints in exchange for a product or service. Companies may point to such concerns when writing these clauses, but underneath it all, it's usually just an attempt to control public perception -- either by discouraging negative reviews or shutting down social media postings that don't align with the official company narrative.

Filed Under: anti-slapp, consumer review fairness act, crfa, free speech, gag orders, non-disparagement, non-disparagement clauses
Companies: kleargear

Company Sues Customer For $1 Million, Claiming Yelp Review Was 'Defamatory,' Violated Non-Disparagement Clause

from the wrong-on-both-counts dept

A Dallas pet-sitting company had a small problem. HAD. But it approached it badly and now it has a much larger one.

It tried to enforce a "non-disparagement" clause to silence an unhappy customer. Copied nearly word-for-word from what is now known as "KlearGear boilerplate," the clause forbade customers from uttering a discouraging word under pain of whatever Prestigious Pets might come up with (including wholly made-up damages on top of legal fees, etc.), and awarded itself "sole discretion" to determine what words/actions would trigger the clause.

An unhappy couple posted a review to Yelp with some mild criticisms of the company -- the worst of it being that the "independent contractor" the company provided had not taken care of the customer's fish particularly well and that Prestigious Pets was difficult to get ahold of.

First, the company's legal rep sent a letter to the customers disputing every claim made in the Yelp review and informing them that their refusal to discuss the issues with Prestigious Pets "violated the spirit" of its bogus non-disparagement clause.

Then it filed a claim for $6,766 against the couple in small claims court, listing everything from "lost work opportunities" to "libelous and slandurous [sic] harm" to violation of the non-disparagement clause. This action produced completely predictable results. The couple aired their grievances even more publicly as the story of Prestigious Pets' clause and retaliatory legal actions began to make its way from local news stations to nationally-read websites.

The couple retained counsel to file an anti-SLAPP motion against the company's claims. But Prestigious Pets, stung by the backlash to its attempted enforcement of its clause, withdrew its small claims court filing (instantly mooting the anti-SLAPP motion) and filed a million dollar lawsuit instead.

Its new lawsuit may contain more detail than its small claims court filing, but it's not any more valid than its earlier effort. And its reasons for filing a "larger" lawsuit are questionable, as Paul Alan Levy of Public Citizen (who is assisting in the legal battle against Prestigious Pets) points out.

The company claims that the relief in its new lawsuit is justified because its business dried up in the face of the publicity about its lawsuit, and it brought new claims against Robert Duchouquette because he had appeared in media interviews where he objected to having been sued in the first place.   But at this point, the Duchouquettes were not only defendants in a lawsuit for a potentially bankrupting amount of damages, but they had to consider the significant up-front expense of having to pay their lawyers for the hourly expense of defending themselves against a SLAPP suit – the small claims suit alone had subjected them to a ten thousand dollar legal bill.

The statement made by the Duchouquettes that seems to most offend the pet sitting company deals with simple facts. The allegations by Prestigious Pets contain phrases never used by the Duchouquettes ("[T]he Duchouquettes have made it an ongoing campaign to tell the world that Prestigious Pets and Kalle almost killed their fish or at least potentially harmed it (without any evidence to support such a claim)...") and indisputable facts: there was excess food on the bottom of the aquarium, the water was cloudy, and overfeeding is almost always bad for fish, no matter what breed.

The couple's motion to dismiss [PDF] attacks Prestigious Pets' use of a non-disparagement clause that gives the company the "right" to severely limit its customers' speech.

Prestigious Pets’ standard contract—which includes a non-disparagement clause—is shockingly one-sided. It strips consumers of their fundamental rights of free speech, arguably going so far as to even bar consumer actions protected by law such as filing a lawsuit in response to egregious wrongdoing by the company. It provides for the recovery of attorneys’ fees—only against the consumer. It sets Prestigious Pets up as the sole judge and jury to determine whether the non-disparagement clause has been violated. Perhaps worst of all, the contract even goes beyond simply barring speech that injures Prestigious Pets, and actually seeks to bar “any action” that in any way—in Prestigious Pets’ sole estimation—harms the company.

What's really bizarre about this entire debacle is that Prestigious Pets tried to distance itself from this non-disparagement clause by claiming it was inserted by "professionals" who assisted with crafting the company's service agreement. This bizarre post-blowup stiffarm attempts to imply the company is somehow blameless, if not entirely powerless to halt the events set in motion by a service agreement the company apparently had no direct input in compiling. Having such a clause in a service agreement is just stupid. Trying to enforce it to shut up critics is suicide. And, as is noted by Levy, Prestigious Pets has already tried to use the clause against another unhappy customer.

There appears to be almost no chance this lawsuit will survive a motion to dismiss. But if anyone's going to learn what needs to be learned from this experience, the anti-SLAPP motion will also need to be granted, along with a fee shift that compensates these customers for enduring a particularly inept defamation suit.

Filed Under: anti-slapp, dallas, non-disparagement, pet sitting, pets, robert duchouquette, slapp, texas
Companies: prestigious pets, yelp

Complaints To FTC About Roca Labs Shows Company Threatening, Ignoring Unhappy Customers

from the '24/7-customer-service'-must-refer-to-the-hours-it-DOESN'T-respond-t dept

Roca Labs says it can help you lose weight by pumping your stomach full of its proprietary Fix-a-Flat-but-for-humans concoction. Once the product sets in, your stomach will have much less room for food. You'll eat less, lose weight, or spend hundreds of dollars trying!

If you find Roca Labs' product suspect or aren't happy with the results, you have a few options available. You can try to get your money back, but that seems to be a route not worth taking. You can complain about the product, but then you'll face the possibility of being sued.

Roca Labs has sued people for posting negative reviews. Roca Labs has threatened to sue people for writing about the lawsuits filed against reviewers. Roca Labs has also sued opposing lawyers, alleging some sort of internet conspiracy to ruin its "good" name. Roca Labs has also threatened to sue us two separate times. Those it hasn't sued, it has hit with bogus DMCA notices.

Judging from its recent history and the complaints filed with the FTC (acquired via FOIA request), Roca Labs appears to spend a majority of its income on marketing and litigation. Customer service expenditures seem to be hovering around $0.

First, there are the legal threats.

Very concerned as this product line is promoted as a "gastric bypass" for children, pregnant women, and overweight persons, but is a ingestible supplement.   I wrote about the product on my site, and was contacted by a lawyer in Israel and threatened to remove it or BUY three containers of the product, USE IT and rescind my posting. Absolutely NOT.

---

If you as a blogger write anything about their product ads, which are incredibly outrageous, they send you a letter saying they will sue you. BUT, you can purchase the product, try it out, write a review and then they will refund your money.

---

I see the 5th paragraph of section of Merchandise Return & Refund Policy seems to violate the Right of Free Speech. The 5th paragraph says and I quote:"If, for whatever reason, you become dissatisfied with The Formula or The Support, you agree not to make, write, post, distribute or disseminate in any way any negative comments about,or relating to, Roca Labs, The Formula, or The Support. This includes writing anything on the internet and making a complaint with Paypal, your credit card company, the Better Business Bureau, etc... Doing so, in light of these clear terms and conditions, would constitute breach of contract and defamation and would be actionable in Florida court. If you can cannot agree to this, The Company asks you not to purchase The Company’s product.

Sure enough, Roca Labs' Terms and Conditions contain a stupid non-disparagement clause [emphasis mine]:

You agree that regardless of your personal experience with RL, you will not disparage RL and/or any of its employees, products, or services. This means that you will not speak, publish, cause to be published, print, review, blog, or or otherwise write negatively about RL, or its products or employees in any way. This emcompasses all forms of media, including and especially the internet. This paragraph is to protect RL and its current and future customers from the harm of libelous or slanderous content in any form, and thus, your acceptance of these Terms and Conditions prohibits you from taking any action that negatively impacts RL, its reputation, products, services, management, or employees. We make it clear that RL and its Regimen may not be for everyone, and in that regard, the foregoing clause is meant to prevent “one person ruining it for everyone.” Should any customer violate this provision, as determined by RL in its sole discretion, you will be provided with seventy-two (72) hours to retract the content in question. If the content remains, RL would be obliged to seek all legal remedies to protect its name, products, current customers, and future customers.

Noted directly below it is the fact that this clause is unenforceable in California -- the only state that bans non-disparagement clauses. It appears to be linked to a discount Roca will give you should you choose to be its gastric jelly ambassador, but it's worded in a way that it affects anyone who purchases its products. If you choose to disparage the company and have signed up to spread the Roca gospel, you'll forfeit the discount. Note the phrase "should ANY customer violate this provision."

Asking for a refund seems to be impossible. Complaints detail the fact that Roca Labs apparently offers no live customer service. On top of that, the company only gives you three hours to stop the shipment of your order. Anything later than that means you'll be charged the full amount. Roca Labs justifies its "no refund" policy by claiming each shipment is made from scratch and specifically tailored to each customer. Sales and shipments are one way only. If nothing else, customers can be assured their account balances will be thinner by the end of their Roca Labs experience.

[part of a CS chat transcript included in one complaint] Roca Labs Premium Support manager Sharon K. replied Hello (b)(6), There is nothing to cancel as no other shipments are due to you. Your procedural kit was shipped in full on 11413. When you ordered you chose to pay your balance in 3 easy installments, the first payment was taken out on 11313 and you have a balance of $420, which is 2 more payments of $210. You cannot cancel paying your balance as this is what you owe for what is shipped. We are so sorry to hear about the medical condition. The return policy was made clear to you several times before you ordered. http:www.RocaLabs.com/return We will be willing to consider partial refund after all payments are made and you have provided a letter from you doctor verifying your claim. You should note that unpaid balances are forwarded to the legal department and added fees are charged which can end up in Florida court with charges totaling $3,200 or so. We trust and love our customers and hope they will never abuse the credit we extend them so they can afford the procedure. Please get also familiar with the Terms of the purchase.

There are more than 100 complaints, most of which revolve around the fact that once Roca Labs has access to your credit card information (which it acquires during its "qualification" process), your account will be charged for the entirety of the purchase, no matter what. There are no refunds, no returns and -- as its Terms and Conditions state -- the company reserves the right to charge you even more if you make your unhappiness with the product public.

Roca Labs tells customers they need to cancel within three hours of placing an order and then makes it impossible for anyone to do that.

If you wish to cancel your order before it has been shipped, you must immediately contact the Customer Care Department via the Website in writing for a full refund.

But...

Generally, Customer Care/Support is available 24 hours, 7 days a week. We will make every effort to respond to you within one (1) business day of any written contact. For your protection after your order has shipped RL requires that all contact must be in writing with Customer Care/Support through the Website ONLY.

How will you know when your three-hour clock starts? Apparently, you won't. You have to run through Roca's "qualification" process before being approved. But apparently you'll only find out if you've been approved by Roca ringing you up for the purchase you haven't agreed to yet.

Went on line 2/16/14 and did app 2 c if qualify for product. Didn't receive any correspondence or confirmation, just a 210.00 charge on my CC.

----

Application' process does not exist and there is no two hour cancellation window. Your acceptance turns out to be supplying your credit card number. Using my credit card, I placed an order for Roca Lab's diet product on May 4th @ 6:04 in the morning. The website discloses a 24 hour 'approval' process. It also states that after receiving 'approval' you have a two hour window to cancel the order. In less than 12 hours, after doing further research on the company, I called customer service to cancel the order. I was advised to send an email to the company. I did that and received an email stating that ' You placed your order on date & time . Your kit went into production on 3/4/2014 6:07 AM . Cancellation can ONLY be done by contacting our support desk at: Support@RocaLabs.com within 2 hours of submitting your health application' The website does not state this in the application screen. In fact it states that cancellation can be done after being 'approved'. I never received 'approval' from the company.

The inability to speak to anyone directly is noted repeatedly in the FTC complaints.

Unable to contact a human to talk about the product effectiveness or to change payment methods.

----

I have been having problems because they arent deligently answering my every questions, everything is done by email

----

YOU CANNOT SPEAK TO A REAL PERSON - you get messages via email or text, no real person! I even tried contacting the manager option (option 3)and only got a message back saying they know about my call.

----

Tried to contact customer service on-line but found no way to do so. Everything was directed to a Nurse which cost money to get support…

----

I tried sending the product back and paid $15.62 to return it, (after calling and not being able to talk to a real person) then they would not accept it…

----

Charged twice for the 'processing of application fee I found it ironic that when contacted about the additional charge and the fact that we were concerned it may be a scam that we were notified it would be addressed within 24 hours. Their policy says if you cancel within the first 2 hours that they will refund. There is no way to contact them for immediate cancellation.

Then there's this, via Adam Steinbaugh -- taken from a deposition of a former employee of Roca Labs.

Q: At what point did you believe that Roca Labs was -- did you come to believe that Roca Labs was deceptive or unethical?
A. When he asked me to dress up like a fat person so I could talk to his customers online about the product that I had never taken and about the weight loss that I had never lost because I've never been on a diet in my life.

[...]

Q. Now, when -- when you were terminated on October 25th, that followed a conversation with Mr. Juravin; correct?
A. Uh-huh.
Q. And the gist of that conversation was that you refused to sign the contract because of the nondisclosure agreement and the reduction in pay; right?
A. Yes.
Q. And in the course of that conversation you talked about the fat suit incident in connection with the nondisclosure agreement?
A. I did.

And this, which ties into Roca Labs' claims that every product it ships out is made uniquely for the person ordering it (justifying the "qualification" questionnaire and fee):

A. I don't know exactly the time period between the phone call and when I took the product. But we had not been opening the product in the beginning of my employ with him. We just started opening the product towards -- I guess into October he got a second shipment that was not -- he thought it had too much product. So he wanted to take some out and put it in smaller bags and that concerned me when I saw that he was opening the powder.

[...]

A: I just thought that really shouldn't be -- you know, a product that people consume shouldn't be taken out of their packaging and repackaged without any type of sanitary handling of it. The handling of the product was not sanitary at all and there was roaches on the floor and dust everywhere, cars were being parked in the garage. You know, there was nothing sanitary about any of it.

From the FTC complaints:

I received a box that looked like it had been tampered with and when I emailed them about it, they said that I am just 'claiming that'.

The 100+ complaints lodged with the FTC are likely only a small fraction of those actually displeased with the company and its no-refund policy. Its Terms and Conditions have probably deterred others from speaking out, what with the threat of being charged even more for a product that they don't want constantly hanging over their heads. With this in mind, it's tough to take any positive reviews of Roca Labs seriously. Instead, they take the appearance of gunpoint cheeriness, where "participants" have the "option" of vehemently praising the company or watching an additional $500-1000 disappear from their bank accounts.

Filed Under: complaints, free speech, ftc, non-disparagement, reviews, slapp, terms of service, threats
Companies: roca labs

French KlearGear Rep Fires Off Email Defending Company's Actions, Claims Suit Against It Wasn't Served Properly

from the offers-nothing,-far-too-late dept

Well, this is interesting. After months of dead air, the person behind the company behind the thin-skinned thug d/b/a KlearGear has finally issued a statement on its decision to charge a couple $3,500 for posting a negative review, along with ruining their credit. In an email sent to Ars Technica (and other sites, apparently), Vic Mathieu of the France-located Descoteaux Boutiques claims this company, the purported owner of KlearGear.com was never "served properly under the Hague Convention," and will be seeking to vacate the recent default judgment against it secured by Public Citizen and its clients, John and Jen Palmer.

With the company's twisted history out of the way, Mathieu goes on to claim that the Palmers did agree to the Non-Disparagement Clause (and its $3,500 fine) when they purchased items (that they never received) back in 2008.

In written communication to Mr. Palmer on 4 June 2012, we informed him that the disparagement clause in our conditions of sale was present the 22 December 2008 when he has certified to us that he has read, understood and agreed to it:

The structure of our sales contract, referenced in your order check-out screens which we have on file from December 22, 2008, had three forks (today there are two): http://www.kleargear.com/help.html, http://www.kleargear.com/termsofuse.html and http://www.kleargear.com/tsaddendums.html.

As was noted when this story first broke last November, the Non-Disparagement clause did not exist in 2008. It didn't appear on KlearGear's site until June 2012. (More in-depth analysis of the changes to KlearGear's Terms of Sale/Service can be found here.) Mathieu is now claiming it was always present -- just at a different URL. (This URL simply redirects to the Help page.)

The problem with this assertion is that it simply isn't true. The Internet Archive has no record of the TSA Addendums URL. It could be that IA was blocked from archiving it or that it was active for such a short period that it was never crawled, but a look at the history of the site map shows that page didn't exist in 2007 or 2009 -- or any other year.

Here's every KlearGear URL archived by IA. It's not in there either. (Yes, I scrolled through 5,000+ URLs.) It could be that the Addendums were served via a Java popup or something similar but Mathieu clearly specifies a URL. He also claims to have "record" of this being agreed to by the Palmers, but apparently "forgot" to attach that piece of evidence.

Mathieu is claiming the Palmers agreed to a non-existent clause on a non-existent page in 2008. The clause still wasn't present when Jen Palmer wrote her negative review in 2009. The Palmers heard nothing about it until 2012 -- not coincidentally the year the Non-Disparagement clause debuted. Mathieu declaring this self-serving email to be KlearGear's "first and only statement" ensures he can never be called out for lying.

But Mathieu's not done making things up.

Kleargear's Non-Disparagement Clause was never deleted from our online store in November last year, as it has been wrongly stated; it was simply relocated with other content on the new URLs (the aforementioned clause can now be found at http://www.kleargear.com/termsofuse1.html).

The new terms of use page ("termsofuse1") first appeared in February 2014 (reinstating the temporarily vanished Non-Disparagement Clause), as can be verified at the Internet Archive. On October 26th, the original Terms of Sales page (along with the offending clause) was still live. By November 16th (a few days after the story began spreading), the page was automatically redirecting traffic to Kleargear's "Best Sellers" page. It may not have been deleted, but it certainly wasn't accessible. It was buried and it wasn't accessible for nearly three months.


Mathieu wraps up the letter by playing the most pathetic of victim cards.

Ironically, if Mr. Palmer had simply approach Kleargear first last fall and requested a stay to finance their new furnace -- we would have worked with him. We are human beings. Instead, he has chosen a public forum.

Really? Because there's plenty of evidence out there that Kleargear (and its multiple associated companies) are completely unapproachable. Not only did the Palmers try to contact the company, but so did several others.

From the original story by Matt Gephardt at KUTV.

Wanting an explanation, Jen says she tried to call the company but could never reach anyone…

When we tried calling Kleargear.com we were unsuccessful in getting through to anybody. By email, a person who did not identify him or herself defended the $3500 charge referring again to Kleargear.com's terms of sale.

Ken White at Popehat:

I tried to get a comment from KlearGear. I tweeted their Twitter account. I left a message on their Facebook page. I repeatedly called "Rob Key," their "Media Relations" person, at the number they provided; it was constantly busy over two days. I called the main number on their website; the recording always says that a customer representative is unavailable on this time and to check the website.

Cyrus Farviar at Ars Technica:

Neither KlearGear nor Descoteaux Boutiques responded to repeated requests for comment via phone and e-mail. A call to the Paris number listed on the e-mail for Descoteaux Boutiques resulted in an automated message in Canadian-accented French and then English saying to call back during European business hours, which Ars has already done more than once.

From the Better Business Bureau:

The BBB contacted the company at the Michigan mail drop address instructing the company to immediately remove the incorrect BBB logo and reference from their site.

While the company did not respond to the BBB, all references to the BBB has been removed from the company's website.

Mathieu also claims his company was completely blindsided by news of the lawsuit's default judgment, claiming Descoteaux Boutiques wasn't notified until April 22nd of this year. As Scott Michelman of Public Citizen points out in his response (below), that's rather hard to believe. The news was everywhere. And there's plenty of evidence that indicates someone involved with KlearGear knew things were swiftly moving from bad to worse to actionable.

Someone answered Matt Gephardt's email during his investigation and defended the atrocious policy. Someone running the KlearGear site scrubbed the TRUSTe certification KlearGear never earned off the site December 5th, roughly two weeks after it was first noted and called out. And, as the BBB noted, someone removed the false "A+" rating as well. Then there's the vanishing Non-Disparagement Clause as well, which was buried behind a redirect to the "Best Sellers" page.

Scott Michelman from Public Citizen has issued a response to Mathieu's BS letter:

On Monday, several news outlets received a statement from the email address vic.mathieu [at] kleargear [dot] com making assertions regarding the lawsuit Palmer v. KlearGear.com, pending in federal district court in Utah.

The email’s accusation that, as the Palmers’ attorney, I misled the court about KlearGear’s whereabouts or about any aspect of service, is entirely false. In accordance with applicable federal and state rules of procedure, we served the Palmers’ complaint on KlearGear at the Grandville, Michigan, address listed on its website, as documented in papers filed with the court and as confirmed by the court’s own judgment.

(This address is all over its website. Not only is it at the footer of the home page, but it's also listed in the "About" page, as well as designated as the address for its legal team/copyright agent.)

The email’s statement that KlearGear lacked notice of the case is difficult to believe, given the widespread national and international press coverage over six months and the fact that news reports from the fall of 2013 contain statements from KlearGear itself regarding the Palmers. Additionally, the email acknowledges that the author was aware of the litigation a month ago. Yet the company allowed the case to proceed to judgment, making no effort during that time to move the court for relief from default.

Most important, Monday’s email does not answer the claims at the heart of this case: that KlearGear used one-sided contractual fine print to try to bully unsatisfied consumers into silence, abused the credit reporting system when the Palmers would not pay KlearGear’s extortionate demand and then defamed the Palmers in the press.

If KlearGear decides to appear in court at long last, we welcome the opportunity to demonstrate that the Palmers are entitled to relief, either because of the company’s default or on the merits.

Surfacing months after the fact to claim everyone else is wrong doesn't make Mathieu or his company(ies) look any more trustworthy. In fact, his email/statement makes KlearGear look even worse. KlearGear's resemblance to a barely-functioning subsidiary owned by an absentee landlord is now confirmed. (More evidence of KlearGear's unwillingness/inability to fill orders can be found at its no-longer-active FAQ/forum, where the most-viewed posts all deal with customer service problems.)

As Mathieu states in his email, people who don't like KlearGear's Terms of Sales can always shop elsewhere, which has always been true. (And I can't think of a single reason why anyone would shop there going forward…) But that sort of statement means nothing when the company blindsides people with Terms of Sales that weren't in place when the order was in the process of being ignored by KlearGear.

Filed Under: jen palmer, john palmer, non-disparagement, vic mathieu
Companies: descoteaux boutiques, 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