Couple ‘fined’ for negative online comments threatens lawsuit, seeks $75,000 in damages

The Utah Couple who were “fined” $3,500 for writing a negative comment online about a small online merchant named has formally threatened to sue the firm, and is asking for $75,000 to avoid litigation. Consumer advocacy group  Public Citizen is representing the couple, John and Jen Palmer of Layton, Utah.

Public Citizen lawyer Scott Michelman sent a “demand letter” to KlearGear on Monday, saying the firm could avoid litigation if it paid $75,000 to compensate the couple for the “hardships and distress” suffered during the past 18 months. It also demands that the firm ensure that the couple’s credit report is cleared up, and that the firm stop using kind of non-disparagement clauses that led to Palmers’ trouble.

(I explained the Palmers’ plight in detail here, and blamed the credit bureau system for the size of the problem.)

The Palmers say they ordered items 18 months ago from KlearGear thet were never delivered. When they complained about the firm on an online message service, KlearGear invoked a non-disparagement clause which indicated the firm could levy a $3,500 fine against consumers who speak poorly of the firm online.  When the Palmers did not pay the penalty, the couple alleges, KlearGear sent notice of the unpaid bill to the nation’s credit bureaus, which ultimately damaged their borrowing ability.

In the letter, Michelman details some of the harms experienced by the Palmers, including: a delay in a car loan, a limitation in the couple’s ability to refinance their mortgage, multiple credit card application denials, and an ongoing hindrance to sale of their home and the purchase of another one.

Michelman said the couple will file suit by Dec. 16 if the two sides do not meet a resolution.

“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,” wrote Michelman in a blog post accompanying notice of the demand letter.  “TechDirt has reported about the use of such a clause in vacation rental agreements.”

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About Bob Sullivan 1115 Articles
BOB SULLIVAN is a veteran journalist and the author of four books, including the 2008 New York Times Best-Seller, Gotcha Capitalism, and the 2010 New York Times Best Seller, Stop Getting Ripped Off! His latest, The Plateau Effect, was published in 2013, and as a paperback, called Getting Unstuck in 2014. He has won the Society of Professional Journalists prestigious Public Service award, a Peabody award, and The Consumer Federation of America Betty Furness award, and been given Consumer Action’s Consumer Excellence Award.

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