Complain All You Want, California! State Outlaws Silly Non-Disparagement Clauses

The Terms of sale on the KlearGear website included this Non-Disparagement Clause that tried to put customers on the hook for $3,500 if they dared to complain about bad transactions.

The Terms of sale on the KlearGear website included this Non-Disparagement Clause that tried to put customers on the hook for $3,500 if they dared to complain about bad transactions.

In the wake of lawsuits over online retailers that try to charge customers huge fees for allegedly violating “non-disparagement” clauses that prohibit customers from complaining about their transactions, lawmakers in California have approved a bill outlawing the ridiculous practice.

This issue has been spotlighted in recent months thanks to legal disputes with a pair of online business.

First there was the lawsuit of KlearGear.com’s non-disparagement clause, which tried to slap customers with $3,500 penalties if they complain about a purchase in a public forum. The clause was buried two pages deep on the site’s Terms of Sale, where no reasonable person would be expected to find it. A customer sued the site after being hit with the fee and the retailer was ordered to pay $306,000 in damages.

The clause has since been removed from the KlearGear site.

More recently, a customer of a very sketchy site called Accessory Outlet sued because its Terms of Sale — which were customers are not required to agree to before making a purchase — include a non-disparagement clause that charges customers $250 for even threatening to complain online or to issue a credit card chargeback.

And so California Governor Jerry Brown recently signed off on a piece of legislation that will make it illegal to try to enforce one of these silly clauses against a California consumer starting in 2015.

Violating the California law will result in penalties of up to $2,500 for the first instance, and up to $5,000 for each subsequent violation. If a customer can prove that it is willful, intentional, or reckless violation” they can be awarded a civil penalty not to exceed $10,000.

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  1. AlaskanPixie says:

    What are the chances this spreads? Or that a different legislation shows up supporting crappy business practices?

    Anything seems possible recently.