Wednesday, November 27, 2013

Online retailer "fines" consumer for bad online review and tries to collect as a debt

ABC News reports a bizarre case where a customer was “fined” by a company $3500 for writing a negative review of its services or products, five years after writing a negative review online. The company claimed this was a “terms of service” violation enforceable by contract, and reported the debt to collection agencies.  I’ve never heard of this practice. 
ABC News reports the story here. It would make “sense” to sue someone, but I haven’t heard of such a “fine” being treated as a “bill” or charge reportable to collections.  I did not encounter anything like this when I worked for a collection agency in 2003.
ABC reports the original company as KlearGear (it was a Christmas ornament that was ordered). The review was written on “RipoffReport”. The curious thing is that the incident had happened in 2008, and the demand for money didn’t come until 2013, and the “defendant” was willing to take down the report. The defendants reportedly will counter-sue.  
The case does remind me of “gag orders” associated with some medical service providers.  I have not personally encountered the practice.  I generally don’t write reviews on other sites (other than very simple ones on Amazon) other than my own, because I have my hands full with my own websites and business.

Update: Nov. 30

The "Legal Guys" on CNN took up this case.  Richard Herman said (even warned) that "non disparagement clauses" are enforceable but that the consumer would win this particular care because the company put in the clause after the fact.  Avery Fisher and guest attorney Paul Callan suggested that, even though non-disparagement can be put into a contract, this was obvious a contract mad ein bad faith and that courts would not honor it.

CNN reported that customers found that the company could not be reached by phone.

CNN also reported a similar "fiine" with a real estate contract in Florida.  But so far, charging a "fee" instead of suing has been very unusual.  It sounds like a frightening idea. 

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