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Valparaiso Univ. Law School

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Monday, November 18, 2013

What Harm Can A Wrap Contract Cause Anyway?

I'm enjoying the posts from Ryan Calo and Miriam Cherry about my book, Wrap Contracts:  Foundations and Ramifications and plan to post a response later this week.  A common question I get (after, Are these things really legal?) is What harm can these contracts cause anyway?  Well, one woman claims that a company can use them to ruin your credit.  The woman, Jen Palmer, ordered some trinkets from KlearGear.com but she claims that she never received them and canceled the payment.  After she allegedly failed to reach someone at the company, she  wrote a negative review of KlearGear.com on a consumer reporting website stating that they have "horrible" customer service.  KlearGear allegedly emailed her, claiming that her negative review ran afoul of a non-disparagement clause in their online terms of sale.  She says that they told her to remove the post or face a $3500 fine.  Ms. Palmer was unable to get the post removed and alleges that KlearGear.com reported her to a credit bureau!  She claims that she is now fighting the negative mark on her credit report which is preventing her from getting loans for a new car and house repairs. 

I don't think the terms of sale are enforceable against Ms. Palmer but that's almost beside the point.  Contracts are used in a variety of ways - one of those ways is to deter problems.  Not many consumers are willing to fight to test the enforceabilty of a contract in court.

But I have a question:  Why would a credit agency ding someone's record simply because they received a call from an online retailer about someone who wasn't even a customer breaching the terms of sale?  I checked KlearGear's website and couldn't find the non-disparagement clause in their terms of sale- they might have removed it after the negative publicity or it might not be in another agreement that doesn't appear until a customer places an order.  There's got to be more to this story...or else we've just entered a new era of abuse by wrap contracts.

 

[Nancy Kim]

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