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article imageCompany fined $306K for charging a couple $3,500 on a bad review

By Walter McDaniel     Jun 26, 2014 in Business
KlearGear.com charged a couple $3,500 for a bad review on a product the buyers never received. They are now having to repay the shoppers with additional damages to the tune of $306,750.
Jennifer and John Palmer of Utah ordered a product from the KlearGear.com website and thought everything would be fine. Their product never arrived and they posted a negative review for the company which soon made headlines. This is because they got charged $3,500 for the review which went to a debt collection agency. The agency went about ruining their credit due to what they thought was a legitimate debt. This was all over a $20 order.
The company probably thought that they could use this in the same way as a "Non-Disclosure Agreement" (NDA). We have these all over the developed world. However an NDA is not the same thing as the non-disparagement clause which the company cited.
Many lawyers agree that non-disparagement clauses are illegal at least in the highly restrictive forms many use them in. This story would be an example of an illegal form.
The Palmers won a victory early on that entitled them to several thousand dollars. Just recently they also succeeded in another case entitling them to the $306,750 mentioned earlier. Those at KlearGear.com might be bothered by the ruling but a few important parts of the law are keeping the Palmers from collecting.
Data theft and scams from Europe are constant problems for those in the United States. South Carolina suffered a cyber-attack where personal information was compromised not that long ago. Eastern European hackers also caused problems for Target and those who shop with them. Due to the complicated nature of international law those who are hacked or scammed by someone in a different country often have trouble getting reimbursed.
This relates to KlearGear.com because they claimed to have an address in the U.S. then later told law enforcement they had no location there. They claim to have a location in France and will likely use this to avoid collection.
The court is going to try and determine what assets KlearGear.com has so that they can liquefy them and pay the victims. Doing this may be a costly and time-consuming process since they have no jurisdiction to do so. We see large companies pay money internationally all the time. We have practically no precedent for a small company like KlearGear paying damages to a family like this.
Even if they do not see their money back their credit is no longer being destroyed and many people now know about the company. As you can see in the attached picture their online reviews are now flooded with 1-star reviews. The other side of being in France is that non-EU users can post what they want in reviews and there is little that a company can do about it.
More about Business, Scam, punitive damages, Law, International law
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