Lawsuit: Retailer Wrecked Couple's Credit Over Bad Review

, The National Law Journal

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Public Citizen Litigation Group staff attorney Scott Michelman
Public Citizen staff attorney Scott Michelman

As the holiday shopping season kicks into high gear, Public Citizen is hauling an online retailer into Utah federal court over some allegedly Grinch-like behavior.

In Palmer v. KlearGear.com, filed Wednesday, the organization claims the retailer demanded that customer John Palmer pay $3,500 he didn’t owe because his wife posted a negative review of the company on RipoffReport.com.

That review appeared nearly five years ago, but Palmer and wife Jennifer Kulas say the disputed charge is still reflecting poorly on their creditworthiness. The couple says they and their 3-year-old child spent three weeks without heat in October because they couldn’t secure credit to buy a new furnace. The also contend that Palmer’s negative credit report is hindering them from selling their home and buying a new one.

According to the complaint, the dispute dates to December 2008, when Palmer ordered a desk toy and a keychain he claims he never received. In February 2009, Kulas posted a review criticizing KlearGear.com’s customer service.

In May 2012, KlearGear.com sent a demand letter ordering Palmer to have the review taken down within 72 hours or pay $3,500. The company claimed the review violated a “non-disparagement clause” in its online terms of sale and use.

The lawsuit notes that the parties disagree about whether that clause was in effect at the time of Palmer’s order. Even if it was among the sale terms, the lawsuit claims it “would be unenforceable under basic principles of contract law and under the First Amendment.”

The complaint claims the debt first appeared on Palmer’s credit reports in August 2012. At some point, the charge was referred to Los Angeles debt collection firm Fidelity Information Corp., which is also a defendant.

The plaintiffs asked the court for a judgment, to apply to both defendants, that the debt is null and void.

Their legal claims against KlearGear.com include violation of the Fair Credit Reporting Act; defamation; intentional interference with prospective economic relations; and intentional infliction of emotional distress. The couple asked the court to award unspecified statutory, compensatory and punitive damages plus attorneys fees and costs.

Public Citizen Litigation Group of Washington said it represents Palmer and Kulas pro bono with local counsel Lester Perry, a partner at Hoole & King in Salt Lake City.

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