BUYER BEWARE OF “NON-DISPARAGING CLAUSES” WHEN MAKING ON-LINE PURCHASES

It is estimated that there will be over $259 billion in on-line purchases in 2013.  So on this “Cyber Monday” we should all take a little caution when we scroll down through the legal “mumbo jumbo” and just click “Accept” when making an on-line purchase.   Appearing more and more in these acceptance provisions are “non-disparaging” clauses which give the company the right to fine you for a negative review and thereafter gives the company the right to make a negative credit report to credit agencies should you not pay the fine.

One Salt Lake family, the Palmers, have found out the hard way after posting a complaint on Rippoff Report following a dissatisfied on-line purchase.  Unbeknownst to the purchaser, the sales agreement contained the following language:

 

Non-Disparagement Clause

In an effort to ensure fair and honest public feedback, and to prevent the publishing of libelous content in any form, your acceptance of this sales contract prohibits you from taking any action that negatively impacts KlearGear.com, its reputation, products, services, management or employees.

Should you violate this clause, as determined by KlearGear.com in its sole discretion, you will be provided a seventy-two (72) hour opportunity to retract the content in question. If the content remains, in whole or in part, you will immediately be billed $3,500.00 USD for legal fees and court costs until such complete costs are determined in litigation. Should these charges remain unpaid for 30 calendar days from the billing date, your unpaid invoice will be forwarded to our third party collection firm and will be reported to consumer credit reporting agencies until paid.”

It has been reported that the company has subsequently removed the clause from its terms of use/acceptance language.

The Palmers have retained Public Citizen to representing them in seeking redress from KlearGear and has demanded that . Today KlearGear: first, clearing up John’s credit; second, paying $75,000 in compensation for the Palmers’ ordeal, which has lasted more than a year; and third, agreeing to stop using this non-disparagement clause to extort money from their customers.

Consumers need to become more aware and better appreciate that with the rapid growth and increase in internet use in conducting day to day business and purchases, companies are not only aiming to increase their business, but also limit their liability.  By adding language on its websites that prohibit and limit the consumer’s right to redress, companies are requiring consumers, whether knowingly or unknowingly, to waive their constitutional right of freedom of expression and in many cases, right to trial by jury.

While these clauses may seem unfair, one-sided, adhesive and/or unconscionable, an argument can be made that the language in the on-line contract is “take it or leave it”, the purchaser is given the opportunity to read the terms and must take the voluntary act of clicking the box indicating that he or she has read the terms, understood them and accepts the provisions, even if that means giving up one’s rights.  While buyers may need to beware when making a purchase, and should be responsible in their conduct,  steps need to be taken, whether through high impact litigation or though legislation, to protect and preserve the rights of the consumer and citizen.

This Post Has 5 Comments

  1. Randall Phillips says:

    Really good advice, and an eye-opener for consumers this Cyber Monday.

  2. Armand Leone says:

    Never had a clue that such clauses existed. I was aware of mandatory arbitration clauses which are problematic enough, but non-disparagement clauses and fines based on the sole discretion of the vendor are way out of bounds.

  3. George Wise says:

    Incredible that a company can give bad service or sell a defective product and then punish the consumer for telling the truth.

  4. Deborah Nelson says:

    What happened to “truth is an absolute defense?!”

  5. James Cook says:

    Don’t these fall under the heading of “contracts of adhesion”? That being said, I don’t care to be the test case to adjudicate their enforceability.

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