KlearGear Reaps The Whirlwind

KlearGear, you may recall, is a company that attempts to enforce a thoroughly despicable non-disparagement clause against customers (including, perhaps, customers who bought things from KlearGear before they put the policy on their web site), and that advertises the support of entities that don't actually support it. The internet reacted angrily, shredding whatever scraps of good reputation KlearGear previously enjoyed.

But KlearGear's bad news is just beginning.

Public Citizen, through Scott Michelman and Paul Alan Levy, have stepped in to represent John and Jen Palmer, the couple whose credit rating KlearGear trashed through its bogus assertion that the Palmers owed KlearGear money for criticizing them. The Palmers are demanding that KlearGear (1) report to the credit agencies that its assertion of debt was in error, (2) agree not to use non-disparagement clauses any more, and (3) pay them $75,000 to compensate them for the problems they've faced because of wrongfully trashed credit (for instance, inability to get a car loan, problems buying a new house, and so on).

Public Citizen is prepared to sue KlearGear on the Palmers' behalf under the Federal Credit Reporting Act and other statutes. Public Citizen will make a formidable opponent. KlearGear will make a terrible client for whatever poor bastard has to represent them.

Read about Public Citizen's representation of the Palmers, and read their demand letter to KlearGear's counsel, here:

As our letter explains, KlearGear's actions violate state tort law and the federal Fair Credit Reporting Act. If KlearGear refuses to comply, we'll file suit to enforce the Palmers' rights and send a message to unscrupulous corporations that they cannot muzzle their customers, extort money from them when they post critical reviews, or ruin their credit when they refuse outragous demands for payment.

Last 5 posts by Ken White


  1. MrSpkr says

    I'm jealous as hell of the fortunate lawyers at Public Citizen. I'd love to take this case forward for the Palmers. Kleargear would do well to settle quickly and completely, meeting the demands and issuing a public apology for being douchebags.

    Of course, that presumes Kleargear won't double down on stupid.

  2. Turk says

    What's interesting is that, even if the contract clause was initially valid despite the anti-disparagement clause, KlearGear breached the contract by failing to deliver whatever bauble that the customer ordered.

    So if KlearGear breached, then bye-bye anti-disparagement clause.

    I will say, however, that they've done a fine job of showing how to commit corporate suicide. So they got that going for them.

  3. DaveCA says

    Trials beat out settling in my brief experience, for one special reason – there are less confidentiality agreements following them.

  4. Anon says

    HURRAH..clapping hands for Public Citizen stepping forward. Kleargear will not be on my list of online shopping venues. Shame on you Kleargear.

  5. Stephen says

    Kirk: I don't know about the lawyers, but I know I would certainly like to see these douche-waffles get legally falcon-punched into some arbitrary future date.

    The better part of me wants this asinine mess cleaned up for the family ASAP. But that tiny, vindictive voice in my head — oh, yes, it screams for justice. Slow, painful, torturous justice.

  6. Matt D says

    Doesn't Kleargear play funny games with who is actually in charge of and behind everything? How much trouble will that give for this suit?

  7. William says

    Sadly, they'll ultimately be able to dodge the bullet by declaring bankruptcy, which is probably inevitable anyway for a company that is so poor at managing its customer and public relations.

  8. JonasB says

    Somewhat unrelated: How do non-disparagement clauses compare against non-disclosure agreements? Are NDAs permissible because they are blanket prohibitions rather than only targeting specific (disparaging) comments?

  9. MrSpkr says

    Kirk: Absolutely that happens. Some of us enjoy the satisfaction of seeing a bully (and particularly, stupid or dishonest bullies) taken down a peg or two. I have taken several cases to trial that, quite frankly, should have settled but for the stupidity and/or arrogance of the opposing party; winning in such situations is quite satisfying.

  10. says

    @Kirk Taylor : It's usually better for my client that the case settle. That said, there are times I'm not sorry when settlement fails, even though trials are more work, either because I think I might get to make some law on a case of first impression, or I just want to drag my opponent. Lawyers are, contrary to popular belief, only human…

  11. Chris Auld says

    The "non-disparagement clause" asserts,

    If the content remains, in whole or in part, you will immediately be billed $3,500 USD for legal fees and court costs until such complete costs are determined by litigation.

    Let us suppose that this language was in the contract when the Palmers made their purchase, and let us ignore the other legal issues with its enforcement. The clause asserts that the $3,500 charge is not a fine, it's rather a sort of downpayment on pending litigation costs.

    Klear Gear did not, in the event, take legal action against the Palmers. Would that be yet another reason the $3,500 alleged debt is void? That is, the "legal fees and court costs" have been "determined" to be zero, so how could Klear Gear enforce a $3,500 bill towards those costs?

  12. CJK Fossman says


    Sadly, they'll ultimately be able to dodge the bullet by declaring bankruptcy

    The parent co is a Delaware corporation. The SCOG v Novell saga taught us several things about declaring bankruptcy in Delaware.

    – The court will allow you to declare Chapter 11 even if your company has sufficient assets on the books to pay your current debts.

    – The court will allow your company to hose its creditors.

    – The lawyers will devour your company.

    – The bankruptcy court in Delaware is, itself, bankrupt of decency.

  13. That Anonymous Coward says

    @Matt D – And with luck they will have shredded any hope of them hiding behind the corporate veil and be personally responsible for their actions. It is possible as they go looking for the correct parties a long list of bad acts is going to pile up at several levels. One does not get to just disband the company and walk away when your behavior is so far out of line.

  14. ketchup says

    A search on Google using Chrome for Klear Gear yields some interesting results. The first non-sponsored link is for the company's own site, but the other links on the page are discussing the disparagement case (the first non-company link is to Popehat!). The Streisand Effect is in full swing! No surprise there.

    What I found interesting was the bizrate.com rating displayed with the "sponsored link" for Klear Gear at the top of the results page. It shows as about 4.5 stars out of 5, for 71 reviews. (Also not surprising if you assume they are fining people $3,500 for negative reviews.) The odd part comes when you click on the reviews to see the breakdown of the star rating. The ratings in the category of "site and shopping experience" are mostly excellent, with ratings of over 8.5 out of 10. But the ratings in the "Ratings after purchase has been made" categories are average to bad, in the 5 to 6.5 out of 10 range.
    So, if a shopper sees only the "star rating" on the Klear Gear adwords ad, they see a bizrate rating of 4.5 out of 5. What they don't know is that evidently this rating applies almost entirely to how people feel about the Klear Gear website. The Bizrate star rating does not tell us that people who actually made a purchase are not very satisfied, even though Bizrate knows this! I am going to think twice before I put any stock in a Bizrate star rating from now on.

  15. CJK Fossman says

    @That Anonymous Coward

    One does not get to just disband the company and walk away when your behavior is so far out of line.

    I gotta disagree with you there. The District of Delaware United States Bankruptcy Court has allowed The SCO Group to do exactly that.

    Ref: the last ~four years of reporting on Groklaw.net.

  16. Christenson says

    @CJK Fossman: Yes, indeed, SCOG is getting away with it, but they had help from someone in the big leagues. Kleargear is just a small-time ripoff. If they walk, the credit reporting companies get to pay up.

  17. James Pollock says

    If they go into bankruptcy, then collection efforts against them must stop. But… what about a suit demanding an injunction (fix our credit rating, you rat bastards). That's NOT a collection effort. Would it be held up by a bankruptcy filing?

  18. MrSpkr says

    Injunctive relief generally bars a litigant from doing something; it does not force the litigant to affirmatively act. What would likely happen in the event this goes to trial and the Palmers win would be a factual finding that the "debt" was never legitimate; the Palmers would then present a copy of this judgment to the credit reporting agencies and demand the item be removed.

  19. Matthew Cline says

    @CJK Fossman:

    The SCOG v Novell saga taught us several things about declaring bankruptcy in Delaware.

    That was just a single bankruptcy trustee who, for reasons beyond mortal comprehension, actually believed SCO's song and dance about their lawsuits having actual merit. The other Delaware trustees have got to be better than that.

  20. MrEye says

    SCOG v Novell
    Somewhat off topic, but with Groklaw frozen in time, i have no idea what's been occurring with SCO/IBM/Novell, Oracle/Google and all the other goodies that PJ reported on. Is there anyplace that keeps tabs on them these days?

  21. Lane D. says


    While PJ has not been updating Groklaw with current articles and the forums are shut off I have noticed some of the pages for the legal filings have been kept up-to-date. Go to the main landing page and click on the "SCO v. IBM" link to see that the last filing was just over two months ago.

  22. Bob Brown says

    Hum. the TRUSTe badge still appears on the KlearGear web site. Annnnd, the fine people at TRUSTe have a form for reporting violations of their copyright in that badge. I wonder whether I'll get a prize for being the 10,000th person to file such a report.

  23. ZarroTsu says

    If Kleargear files for bankruptcy, maybe lawyers could wait five years, then report a $75,000 debt to the credit agencies. It's only fair.

  24. says

    But it's all because of KlearGear's "effort to ensure fair and honest public feedback." I mean, how can you argue with that?

    It's like saying "I don't mean to be racist, but . . . ." You put that at the beginning of a sentence, and then you get to say whatever you want. That's how the internet works, right?

    All the Palmers had to do is start their review with, "I don't mean to be critical, but" and they would have been fine.


    Any KlearGear counsel should read this post with the words "I don't mean to be sarcastic," added to the first sentence.

  25. sinij says

    Feel free to ignore this derail, but I would like to request a blog post covering some of this:

    Ideally, can someone explain to IANAL Popehat readers how to fight this if it ever happens to them?


    I refuse to consent to police search of my vehicle
    They find spare tire compartment in the trunk and call it secret compartment
    I get arrested and my car is confiscated.

    How do you fight this?

  26. Al says

    Bold predictions: KlearGear files bankruptcy. Anyone involved in the company walks away never to be seen nor heard from again but otherwise unscathed. Everyone who had their credit trashed by them ends up more or less on their own to clean up that mess. Most continue to have problems clearing up their credit for about seven years.

  27. Bill says

    Out of ignorance / curiousness, I am wondering, how did KlearGear get the ability to make a negative comment on a credit report? That would require a debtor relationship wouldn't it?

    It seems like there is something missing here, or perhaps my view of what credit agencies will take as credible credit reporting is flawed (likely the latter).

  28. says

    That would require a debtor relationship wouldn't it?

    Yes, which basically means that KlearGear asserted that they had such a relationship and the credit agencies believed them.

  29. Eric Stein says

    I just had a look at the http://www.kleargear.com/ website and I think I see the problem: Lee Gersten, the president, appears to be a six year old boy. It surprises me that no one else has come to this conclusion, given the proximity of the picture to his statement.

  30. Zazlo says

    Off topic, so I'll try to be brief. DaveCA commented above:

    "Trials beat out settling in my brief experience, for one special reason – there are less confidentiality agreements following them."

    It's the confidentiality agreement part that fascinates me. Me immediate thought has been to wonder how cnfidentiality agreements are even a thing. It seems to be a 1st Amendment issue, but not a good one. I would guess that, absent CAs, one would use more speech to combat information out there that allege wrongdoing despite a settlement. Although more theoretical, if no one could demand a CA, it would in general be known that probably every company has at least a few people talking bad about them, and that'd all even out in the end. Assuming that mainly corporations ask for CAs. So I wonder: of all the CAs per year, how many by corporations, how many by private citizens? Can CAs ever be challenged? Is there a way to decisively strike their use down in settlements? I can't quite articulate it, but there seems to be something markedly wrong and dishonest about the use of any CA. If anyone can point me to sites, articles, etc., where I could answer these questions, I'd be grateful, as I'm unaware as to any in depth research into CA use, analysis, stastics, and all that.

  31. says

    A confidentiality agreement is simply a contract between two private entities, no different from, "I'll gladly pay you Tuesday for a hamburger today."

    In exchange for consideration, i.e., the settlement terms offered by the defendant to the plaintiff, the plaintiff agrees to the terms of the confidentiality agreement demanded by the defendant (yes, confidentiality agreements can go in the other direction, but that's a lot less common). The contract is legal and enforceable because both parties get something of value.

    It's not a First Amendment issue because it's not the government restricting speech, it's a private entity agreeing to restrict its speech in exchange for something of value from another private entity.

    I don't particularly like them either, but I can't see how they could be outlawed without trampling all sorts of contract rights.

  32. Mr Shotgun says

    I am not a lawyer type person but I am having a hard time understanding how Kleargear thinks this so called debt is in any way valid with the facts as they are.

    The husband places an order under their original terms of service that did not have the $3500 fine for negative reviews. The sale is cancelled 30 days later for non delivery by kleargear. The wife then writes a negative review for their crappy non service, All this in 2008. Kleargear then adds the $3500 fine 4 years later in 2012 to their TOS and threatens the husband with it. They then report it as a debt for some odd reason and the credit companies accept it as legit.

    I am just having trouble seeing how any of this would fly in court. Asserting a clause that didn't exist on a transaction that wasn't completed because of the the actions of a person that was not party to either the acceptance of the Terms or the transaction itself.

    I mean even if being extremely generous to kleargear and accepting the fee as legal and the retroactive changes to the TOS being valid, wouldn't the facts of Jen Palmer making the negative review and not her husband and the sale never being completed kinda blow everything out of the water?

  33. Trebuchet says

    From reading the comments here, it appears Kleargear is going out of its way to obfuscate its ownership and leadership. Kind of like Prenda, except Kleargear is doing a better job of it.

  34. LauraW says

    @ketchup: What search term did you use when you saw KlearGear ads in the Google search results? Just plain old "klear gear"? I decided to report them to Google's AdWords policy team, but when I searched for the ad I couldn't find it.

    I work on the engineering side of AdWords policy enforcement, though I'm on medical leave at the moment. I'm pretty sure a "Don't say mean things or we'll charge you tons of money and ruin your credit" clause would violate the "Unacceptable Business Model" part of Google's "User Safety" policy. Probably the "Unclear Billing" policy too. It would be the policy and legal teams making the call on whether this is a policy violation, but in a case like this I might lobby a bit.

  35. Trent says

    Kleargear can't go to the level of obfuscation as Prenda did. They were doing retail transactions with credit card companies. They likely have employees and IRS reports.

    Prenda didn't sell stuff, they didn't need on shore back accounts, they didn't have merchant credit accounts, etc. All they needed was an off-shore corp to funnel the money to but even then the money will likely be traceable unless they haven't spent a penny of it. Kleargear will be highly traceable due to those normal merchant accounts and on shore US businesses. And just like Prenda tracing the money is going to reveal the owners even if they were stupid enough to file false incorporation documents with a state.

  36. nlp says

    The Palmer's fight with KlearGear just made the top of the ABC news site. The sound of the Streisand is heard throughout the land.

  37. says

    @Mr Shotgun Of course KlearGear's actions against the Palmers is completely illegitimate, and of course if it ends up going to court the Palmers' lawyer is going to gleefully rip KlearGear to pieces in short order, not to mention the potential for criminal fraud charges as well.

    You seem to be making the assumption that people don't assert the legal authority to do something unless there is actually some basis for said assertion. That's nonsense. People act far outside the bounds of the law, all the while asserting that their actions are justified and legal, all the time. There are many other examples on this very blog.

    Whether they actually believe their assertions is only a mildly interesting question. I have two basic rules in life: people are stupid, and people are a*holes. It's hard to know whether either or both of these applies to KlearGear. If the former, then they may actually think what they're doing is legal. If the latter, then they may know it isn't but just want to intimidate people into not bad-mouthing them online.

  38. Elwood Blues says

    I see that KlearGear has gone from protecting there tweets to deleting there twitter account.

  39. Trent says

    Anyone wanna take bets that Kleargear goes full on stupid and tries to delete or conceal evidence?

  40. Mr Shotgun says

    @Jonathan Kamens Oh I know people and companies step outside the bounds of the law, sometimes running gleefully out of bounds while thinking they are the smartest people in the world (whadaya mean I can't hop on the subway in a marathon, I am still wearing the number aren't I?)
    It's just this one fails at everything. I am thinking who ever made this decision tests positive in both categories in your Stupid/A**hole test.

    If they we just stupid but otherwise pleasant they should carry a plant around with them to replace the air they are wasting. To not see the basic breakdown of logic when looking at this situation when any grade school child could see the flaws plain as day make me believe they shall make the news as the first person to drown trying to drink a glass of water.
    On the other hand if they were a**holes but other wise competent, I would wonder if they even wanted to stay in business. Threatening and chasing away potential first time and repeat customers is one of the surest ways to ruin a company. Probably second only to hiring Bowerick Wowbagger as your ad man.

    No, the only way these actions by Kleargear make any sense is if they are honest to god, dyed in the wool, genuine, really stupid a**holes.

  41. Mr. Shotgun says

    And the hits just keep coming.
    The BBB and TRUSTe confirmed that Kleargear are using their logos without permission. And Experian is investigating the so called debt on Mr Palmer's credit record. Oh to be a fly on the wall of Kleargear's boardroom Monday morning.

  42. Mike says

    Is there no such thing as the Constitution or freedom of speech? What happened to this country? You aren't allowed to speak truth? This is America, not North Korea

  43. Larry W says

    The CNN video here looks like an update to the story Jeff linked to on the 29th. With text. Also by Pamela Brown. No mention of popehat.