Dive Brief:
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U.S. District Judge Dee Benson on April 30 gave a default judgment after retailer KlearGear.com failed to answer its customers’ lawsuit. Benson ruled in the plaintiffs' favor, and also said the retailer violated the Fair Credit Reporting Act and is liable for defamation and intentional infliction of emotional distress.
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The customers had given the retailer a negative review after failing to receive the goods they’d ordered, and KlearGear fought back by reporting their failure to pay to credit agencies.
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KlearGear had a “non-disparement clause” that it said precluded anyone from posting negative reviews online.
Dive Insight:
This case is a bit of an outlier because most retailers don’t retaliate quite like this when they receive negative reviews. KlearGear didn’t show up in court — possibly a sign that officials may have known what its chances were.
But the bigger problem is that things landed there at all. The case points out the futility of adding clauses to “terms of agreements” that customers might automatically check when completing an online order; the customers in this case made their argument in part on First Amendment free speech grounds. More important is the bigger picture: The best way to answer customer complaints is to attempt to resolve them in a way that protects a retailer’s reputation and possibly even boosts loyalty.