As the blog post kindly submitted here points out, the company's conduct appears to be fraudulent, and there isn't the tiniest chance that the woman who made a legitimate factual statement about the company in an online review will have to pay even one cent to the company. Good on Popehat and other sites for spreading the word about how scummy that company is. (By the way, the title of the submission here is misleading, and is not the original blog post title. Popehat's title is "New From KlearGear: Free Speech, Only $3,500 Plus Shipping And Handling," and that even fits the length limit imposed by Hacker News.)
You can find TechDirt's coverage, which prompted the blog post submitted here with additional legal analysis, at the TechDirt site.
http://www.techdirt.com/articles/20131113/06112425228/online...
The TV news report that got this story rolling:
http://www.kutv.com/news/features/gephardt/stories/vid_474.s...
AFTER EDIT: To answer the question that has come up, which I think is adequately answered by the submitted blog post, companies can report consumers to credit bureaus for nonpayment, including nonpayment of civil judgments. But when those reports are fraudulent, as here, the consumer can also dispute the report, and the consumer should be able to come out with a clean credit record in the end. MANY years ago, my wife ordered a product by mail order, and we discovered the product was defective, and returned it. The company still wanted to bill us, and sent us a letter threatening to report us to a credit agency if we didn't pay. I simply wrote that the product was defective and that we had returned it and we disputed the company's point of view on the company's demand letter, and sent that back by return mail. That was the end of the matter, back in those days. We have a very clean credit history. I speak my mind whenever I think I have been ripped off.
This story has the stench of meltdown on it. Like when Jack Thompson slowly lost his sanity, when Charles Carreon lost his marbles when dealing with The Oatmeal, or basically the entire Rightshaven situation...
I have the strong suspicion that this has the potential to get much uglier and more bizarre. Going after this woman three years after she left her comment is not something that a sane company/legal representative in a good position decides to do.
Ugh... if a HN title ever needed a change (the current one is "Woman Facing $3,500 Fine For Posting Online Review"), it's this one.
Jen Palmer is not facing a $3,500 fine any more than I'm "facing" the threat of being struck by a meteor on my birthday. She'll pay this horrible company a dime the day Eskimos need to worry about tigers, and I actually can think of a good analogy.
This title seems intended to gin up outrage where there should be none. To be sure, I'm outraged at this company's terrible ethics. But in this case our legal system actually works. News at nine.
It is my understanding that the company has actually sold the fraudulent $3,500 debt to a debt collector. The woman in this case has an excellent defamation case against the companies and a claim for treble damages (I believe) and attorney fees under FDCPA. She should contact an attorney and file a claim against this company. Between that damages and attorney fees, they may be looking at a $50-80k bill at the end of this all, plus the bad publicity. And I hope they are made to pay, because this is outrageous.
They reported her refusal to pay the $3,500 "fine" to the credit bureaus. A common way of dealing with such a thing is to file a small claims suit for the maximum amount in your jurisdiction for defamation. For example, in my jurisdiction the maximum is $8,000. The fact they are saying negative things about her is undisputed since it is in black and white on her credit report. So the next thing is for them to prove that the negative things they are saying are true. They won't be able to prove their one-sided contract that never offered consideration is valid. Then they'll move on to damages and she states in the article she was repeatedly denied credit and offered credit at less favorable terms.
This little stunt of theirs should cost them a lot of money.
"In an effort to ensure fair and honest public feedback ... this sales contract prohibits you from taking any action that negatively impacts KlearGear.com"
That's some great doublespeak right there.
New: over the past couple of hours, the woman herself has posted a number of comments on Reddit clarifying:
Reviews are a tough spot. On the one hand, reviews can be very damaging to businesses, so it is important that some measures are in place to ensure that the review is honest and genuine, and on the other hand its important that consumers can openly review a product/company without being scared of reprisals.
Clearly, in this case, KlearGear are in the wrong, but I also think that there are cases where legitimate businesses have been seriously damaged by competitors, or just difficult customers writing unfair bad reviews.
Unfortunately the only solution to this I can think of would be a review of reviewers, which would just confound the problem.
The title should be changed to match the title at the site, which is "New From KlearGear: Free Speech, Only $3,500 Plus Shipping And Handling".
Their ridiculous non-disparagement clause purports to apply to all forms of communication (or perhaps to all forms of communication that are "published", depending on how you read the thing). In this particular case, they are trying to enforce it against an online review, but that's an irrelevant detail. The title here emphasizes that irrelevant detail too much.
As this picks up more media attention, the total number of customers that this will deter will greatly offset the $3,500 fine the company may end up receiving. Karma will prevail.
Isn't there yet another way the contract is invalid (since they go through a few already)? It's stated in the article that the customer never received the item they paid for. Isn't the contract contingent on both parties following through (the customer paying, the business delivering paid for service or goods)?
Just because you put a bunch of crap in your T&C's doesn't make it law and legal regardless whether or not someone agrees to it or not.
How about finding out which lawyer wrote that TOS and getting him/her disbarred?
> But a lawsuit isn't at the heart of KlearGear's despicable tactic. Ruining the credit of its critics is. ...If that fine is not paid, the delinquency will be reported to the nation's credit bureaus.
Question: what ability do most companies have to report something to credit bureaus? I mean, selling my stuff with just Stripe and a DBA, I certainly can't, as far as I know. Credit-card companies themselves certainly can, on the other hand.
Is there a way for "normal" small businesses to affect your credit score based on any kind of non-payment of bill? How do businesses "acquire" this ability? Can anybody just tell a credit score company, "X didn't pay me money, knock their score down"?
I'm just wondering if this is a bluff, which it probably is.
[Edit: Googling it a bit reveals that there are two methods. One is to hand the debt over to a collections agency -- you'll receive less of it, but they'll automatically report to a credit bureau if it's not paid. The other is to become a member of the three main credit organizations, but that involves membership fees etc., so presumably only makes sense if you deal with a lot of consumer billing already where this is a regular occurrence.]