Lawsuit Over On-Line Review Results in $300K Award Against Retailer

A federal judge has awarded more than $300,000 in a lawsuit filed against an online retailer, after the company attempted to use unethical fines and corporate bullying tactics to retaliate against the consumers for writing a critical review online.  

On Wednesday, Judge Dee Benson of U.S. District Court in Utah awarded a Utah couple $102,250.00 in compensatory damages against KlearGear.com, with an additional $204,500.00 in punitive damages awarded to punish the retailer for their abusing credit reporting systems as a means of retaliating against customers who posted negative statements about the company on the internet.

The lawsuit was filed by John and Jen Palmer, with the assistance of the prominent consumer watchdog group Public Citizen, which announced the verdict in a press release yesterday.

In 2008, the Utah couple made an under $20 purchase from online retailer KlearGear.com. After never receiving their product and never getting a response from KlearGear’s customer service, they cancelled their order and wrote a negative review on the company’s website about their experience. When KlearGear became aware of the review, the company attempted to charge the couple a $3,500 Non-Disparagement Fee.

KlearGear claimed the couple broke the Terms of Sale agreement, which included a Non-Disparagement Clause that purportedly prevents customers from taking any action that negatively impacts KlearGear, its reputation, products, services, management, or employees. The Clause states that in the event of this the person would be given 72 hours to remove the content in question and if not abided by then a $3,500 fine would be issued that may be sent to a collection agency if not paid in an allotted time.

When the Utah couple refused to pay the $3,500 fine issued by KlearGear, the alleged debt was sent to the credit bureaus, resulting in damage to the couple’s credit score.

John and Jen Palmer contacted advocacy group Public Citizen who then filed a lawsuit on behalf of the Utah residents on December 18, 2013, claiming KlearGear’s unethical fine that ruined the Palmer’s credit score caused them damages. The Palmer’s claimed they lost credit opportunities, suffered anxiety, caused fear and humiliation, and caused the Palmer’s and their 3-year-old son to suffer the winter without heat for their home because when their furnace broke the couple could not obtain a loan to replace it.

The company failed to participate in the lawsuit, and the couple won a default judgment declaring the Palmer’s did not owe the $3,500 fine and set a hearing for Wednesday. At that hearing, during which both plaintiff’s gave an hour long testimony, Judge Dee Benson issued the couple $306,750 in compensatory and punitive damages.

There are questions about whether the France based KlearGear company will pay the judgment due to their lack of participation in the case, in which case Public Citizen attorneys said they will go after any of the company’s U.S. assets.

KlearGear’s parent company, Descoteaux Boutiques (DBS), said it was never notified in France of the lawsuit. However, the company’s website claims that it is located in Grandville, Michigan, and even shows a picture of a building that sits at that location and states that customers would abide by Michigan laws by doing business with the company.