Website Pays Dearly For Fighting Negative Review

John Lister's picture

An online retailer that threatened to "fine" a couple $3,500 for leaving a negative review online a website has now been ordered to pay $306,750 in compensation and legal fees. John and Jennifer Palmer won the verdict as compensation for KlearGear damaging their credit record with a bogus debt claim.

Back in 2009, Jennifer Palmer left a negative review of the company after it failed to deliver two desk toys ordered by her husband. Three years later, KlearGear demanded that the couple withdraw the review within 72 hours or face a fine of $3,500. The fine is for violating a non-disparagement clause in the company's terms of sale, which says that customers cannot write negative reviews about their products or purchases. (Source:

Online Sales Clause 'Bans' Negative Reviews

There were three problems with that demand. According to the Palmers, KlearGear had already breached the contract with its failure to deliver the goods. Meanwhile, KlearGear said the couple had failed to pay with the original order and the order was cancelled; that arguably meant the contract was void. And in any case, it turned out the non-disparagement clause was irrelevant, as it wasn't added to the terms of sale until long after the 2009 order was placed.

Unsurprisingly, the Palmers refused to take down the review or hand over any money. That led to KlearGear instructing a debt collection agency to try to get the $3,500 "fee" - something the Palmers say hurt their credit rating.

Last month, a federal court agreed to issue a declaratory judgment to say that the Palmers did not owe the $3,500. That ruling doesn't have any immediate practical implications, but would effectively guarantee defeat for KlearGear if it did pursue legal action over the alleged debt.

First Amendment Issue Still Unresolved

At the time, the Palmers also asked for the judge to rule that a non-disparagement clause would be unlawful as it violates the First Amendment. It doesn't appear that issue was addressed in the ruling.

Now the court has agreed that KlearGear must pay a total of $306,750: a combination of compensation for the actual damages caused to the Palmers, punitive (punishment) damages for its behavior, and legal costs. Both court rulings were default judgments, as Klear Gear did not attend and present a case. (Source:

Klear Gear has yet to comment on the damages award. It's not yet certain that the Palmers will be able to enforce the judgment and collect the money.

What's Your Opinion?

Do you think companies should be allowed to use non-disparagement clauses for online sales? Do you think non-disparagement clauses violate the First Amendment? Have you ever left a negative review of a product online? How much notice do you take of online reviews before making a purchase?

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Average: 4.8 (13 votes)


Dennis Faas's picture

To fine people for negative reviews is absurd.

When it comes to online shopping: if I haven't used the site before, or if I haven't used the product brand before, or if I'm not sure about the quality of a product, then negative reviews are the first thing I look at. This applies to any website, product, or service - even when I shop online

If I don't see any red flags, then I'll look at the positive reviews. I'll keep all of this in mind, then compare the information with another product, website, or service and ultimately make a choice.

doulosg's picture

It does depend on the product. A mass consumer product, say a toaster, that is subject to manufacturing problems, should tend to get more negative than positive reviews. The theory is that there is more incentive to write a review when a problem occurs than if the product works as expected. What I would be looking for in such product reviews is not whether lemons occur but how the manufacturer or merchant responds to them. If there seem to be a lot of lemons, I'd want to be sure to purchase from a reputable merchant who will be my intermediary with the manufacturer.

As to disparagement clauses being a violation of First Amendment rights, that may be for the courts to determine, not public opinion. I do suspect it is more likely to be a statutory issue rather than a constitutional one.

And yes, I have posted negative online reviews of purchased products and services.

PayPaul's picture

KlearGear clearly failed to DELIVER the promised product. Apparently, from the article on Ripoffreport they had paid for the product and were given the runaround by the company's customer service department with KlearGear making false claims of non-payment. The Palmers had every right to review the company in the way they did if only to get them to do the right thing.

xena's picture

KlearGear has done way more harm to themselves by this fine that they can't even collect. I had never heard of them but now that I have I can guarantee that they will never get my business. It looks like they have some neat stuff (kinda like ThinkGeek) but there are plenty of other, reputable, places to get these products.

Also, the first amendment only applies to the government. A private company cannot infringe on your constitutional rights.

Stuart Berg's picture

If you go to using Mozilla Firefox with the WOT (Web of Trust) Add-in, you will see that it is rated "Very poor" for Trustworthiness and "Poor" for Child safety. There is no way in hell I would ever buy anything from them!!!

PayPaul's picture

Are the legal councils of KlearGear brain dead? Try and sue me KlearGear! I don't have any legal background but isn't it quite obvious that you can't enforce a rule created after the fact? On its face this Non-disparagement agreement is ludicrous. Free speech by corporations is perfectly fine with the Supreme court so equal justice should apply to individuals.

nate04pa's picture

I read negative (and positive) reviews as part of my decision-making process.

If a website invites its users to leave reviews, it must be prepared to accept whatever the reviewer wishes to say unless it is patently untrue.

What I find interesting is someone writing a negative review of, say a hotel or cruise, and then see another glowing review of the same item. Makes me wonder.

jlggg's picture

I can't see any reason for a non-disparagement clause in any type of online transaction, and such a clause is an automatic red flag that there is a definite problem with the online entity's trustworthiness.

Negative and positive reviews are generally posted in relation to products bought from the online entity and rarely are about service issues, and if they are, they are usually publicly replied to by the online entity, which allows potential buyers to see that the company addresses customer service problems and wants to make its clientele happy. Any other response to a public complaint is counter-productive and just plain bad business.