Customers today have a sense of freedom and power they didn’t have a decade ago when social media was still in its infancy.  But as social media has become a part of people’s daily lives, more people are turning to business review sites like RipoffReport.com and Yelp.com, as well as social sites like Facebook and Twitter, to post comments about a company or product.

Many purchasers will often read customer reviews before purchasing a trip, a toy, a smartphone or even making a reservation at a local restaurant.

There is an ongoing debate about the limits of consumers’ free speech rights and companies’ efforts to quash negative online reviews due to a recent incident over a customer review about KlearGear.com.  KlearGear threatened to fine the customer $3500 if she didn’t take down a negative posting about their company.  She had written the critique on RipoffReport.com.

According to a recent article in TechDirt, “Lots of quasi-legal action has been taken over negative reviews left by customers at sites like Ripoff Report and Yelp. Usually, it takes the form of post-review threats about defamation and libel. Every so often, though, a company will make proactive moves (usually bad ones) to head off negative reviews.”

In the Kleargear imbroglio, a consumer complained that her husband had ordered a number of products from Kleargear.com and 30 days later the products allegedly had not yet arrived.  The consumer tried to call the company to check on the status of her order but was allegedly not able to reach anyone, so she wrote about her experience on RipoffReport.   After the company saw the post, the consumer was threatened to either take the negative review down or be fined.

Palmer ignored the threat by Kleargear but there were serious ramifications: The ABA Journal, a legal journal published by the American Bar Association, reports, “Although Kleargear apparently didn’t sue to force [the consumer] and her husband to pay the $3,500 fine after its takedown demand several years ago was ignored, it did report her as delinquent to credit agencies, which has made it impossible for the Utah couple to get loans for a car and to fix their furnace, according to the station. The couple has disputed the negative credit-report entry to no avail.”

According to TechDirt, Kleargear had “non-disparagement clause” in place – which they now say has been yanked from Kleargear  (probably due to the negative publicity over the current issue) that reads in part:

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.

The ABA Journal writes that other companies are adding anti-disparagement provisions to their terms of service but the legal issue is whether these provisions are really enforceable and the ethical question of whether they should be.

Of course, if you intend to enforce an anti-disparagement clause against a customer for non-delivery of a Christmas present, you also should be prepared for hundreds of news articles and blog posts disparaging your company for its Scrooge-like policy.  You also might expect a lawsuit (filed this week in Utah federal court) suing your company for violating the Fair Credit Reporting Act, defamation, intentional infliction of emotional distress and more.  It’s going to be a very expensive fight over $3,500.