In the Internet age, online review sites can have a huge impact — positive or negative — on a business. Foodies are notorious for ripping restaurants to shreds on sites such as Yelp! and UrbanSpoon, and no seasoned traveler would dare book a hotel or hostel without first checking out their rating on Hostelworld or TripAdvisor.
Figuring out how to weed out sincere customer comments from baseless assaults that can damage company reputations is the tricky part. Since reviews are generally considered a form of free speech, short of asking consumers to remove negative reviews or filing complaints with review sites themselves, business owners typically have to go the legal route: proving the comment was defamatory or libelous and getting a court to intervene.
It's tough but it can be done.
In 2011, a pair of Arizona surgeons won $12 million in a lawsuit against a patient who created an entire website accusing the doctors of botching her plastic surgery. And just last year, a Virginia woman was sued for $75,000 by a contractor after she allegedly assailed him on Angie’s List and Yelp.
But in what is one of the more bizarre business vs. reviewer stories to date, a Texas woman claims a retailer not only fined her for a negative review she posted but retaliated by reporting her debt to credit bureaus afterward.
Jen Palmer told KUTV she posted a negative review of KlearGear.com after the company failed to send her an order a month after she placed it. Three years went by without consequence, but then, after all that time, the company called her demanding she have the comment removed. KlearGear claimed Palmer had agreed to their terms of sale at checkout, which warned customers of a $3,500 fine if they posted libelous comments online and said they would report the fine to credit bureaus.
A real threat
Turns out the threat was real. Palmer and her husband couldn’t afford the $3,500 charge and say they have been denied by lenders for new credit ever since.
There's no doubt companies should be able to prevent defamatory reviews from hurting their business, but the idea that a business could wreck a customer's credit because of a seemingly valid complaint was too bizarre for even consumer experts to wrap their heads around.
“What a wacky story,” says Suzanne Martindale, staff attorney for Consumers Union. “I’ve never heard of this kind of clause before, but let’s face it, how many people sign contracts every day without looking at the language [in the terms of agreement]?”
She calls KlearGear's negative review policy "incredibly onerous," adding "I don’t think most people if they saw this would still do business with that company."
John Ulzheimer, consumer credit expert with Credit Sesame, was stumped as well.
“Threatening to fine their customers for voicing their opinions seems more like something you'd run into in an oppressive country rather than in the United States,” he says.
We weren’t able to reach KlearGear or Palmer for comment, but Ulzheimer says his best guess is that KlearGear enlisted a third-party debt collector to go after Palmer for the fine. When she was unable to pay up, the debt collector likely reported the delinquency to credit bureaus, which would explain why her credit score took a hit.
The fastest way for Palmer to clean up her credit would be to prove KlearGear’s disclaimer about the fine wasn’t included at the time she posted her review. So far, KlearGear is standing by its disclaimer, although KUTV found no sign it existed three years ago.
“If there was nothing in the online agreement … obligating them to pay $3,500, then [dinging] a consumer credit report is likely a violation of the Fair Credit Reporting Act, The Fair Debt Collection Practices Act and equivalent Texas state statutes,” says Ulzheimer.
Not alone in their frustration
All evidence shows the Palmers weren’t alone in their frustration toward KlearGear. The company had an ‘F’ rating with the Better Business Bureau the year they posted their negative review online (their rating is currently a ‘B’).
Some commenters on the KUTV story reported the company was flagging negative comments on its Facebook (FB) page for removal. We checked and it appears the Facebook page has since been entirely removed. If KlearGear is attemping to protect its reputation, we're not sure all-out censorship is the way to go about it.
“Regardless, this is a colossal black eye for KlearGear," says Ulzheimer. "Rather than being afraid of their customers’ feedback, I would imagine a company would actually want to know what they thought so they could improve their service.”
The bottom line: Situations like Palmer's shouldn't necessarily deter customers from speaking the truth about their experiences with a business, positive or otherwise, so long as it's the truth. Policies like KlearGear's may be entirely bogus, but businesses have proven time and again that they're willing to take customers to court if they feel particularly burned by a bad review.
Email Mandi Woodruff at firstname.lastname@example.org.