"a public service lawyer has agreed to take the case and fight back with demands for $75,000 in compensation."
. . .
"Michelman said the $75,000 compensation amount is in the high range of a typical award for acts in violation of the Fair Credit Reporting Act."
This is an old story now, already discussed extensively here on Hacker News. The new information here is simply that the couple has a lawyer, who can afford to represent them on speculation because of a federal law that allows recovering damages from a company that tries what KlearGear is alleged to have tried in this case. We'll know the final outcome after the litigation proceeds, but I predict a good result for the Utah couple.
went back and forth over most of the issues raised by this story. Bottom line: the couple has to follow certain procedures to respond to a credit agency report about their behavior, and the credit agency report about their personal credit history seems to have other adverse information (reported in one of the sources discussed in the earlier thread). All's well that ends well, and I expect this case to end well for the couple and badly for KlearGear.
What I don't get is that the husband went to the website and made the order, but it was the wife that made the review when the order (a gift for her) never showed up... So she and the company have no TOS agreement (there is no contract between them). But this is not even mentioned or used in the lawsuit?
> Michelman also said that the "non-disparagement" clause was not even on the website when John Palmer placed his order in 2008.
So why not get them for fraud and some other federal charges too?
This is a really stupid mistake for a company to make, the outcry is way worse than one bad review. Googling "KlearGear" now brings up a ton of bad press. I guess it's relatively easy for a company like this to change their name and do the same things though?
Agreed. Someone running the company was not smart enough to realize that the likelihood of them collecting the $3500 was low, and when the couple first hit the press with the "fine" they should have backed off and claimed it was some mistake. I don't know what blinds people from what seems like common sense.
I had a similar problem once. Cleared it up by writing a letter with the entire situation, the letter started with:
To: My State's Attorney General
Address....
CC: Company affecting my credit
Address...
CC: Collection company
Address...
Then made three copies and sent the letter's out. AG's office sent me a case number after just two weeks. The Company reporting the bad debt within two months, denying any wrong doing while immediately "fixing" the "misunderstanding". It was an interesting learning experience.
Strictly speaking, a company can charge an individual for breaking terms of a contract, but not fine. The word "fine" is normally reserved for entities with policing powers, although, language being what it is, you may see usage exceptions.
The shocking news to me is that in the US, a random company A can cause you to not be able to obtain heating from another company B, due to the existence of "credit reporting agencies". (Disclaimer: I'm not from the US)
A good predictor of whether you'll repay a new debt is your track record of paying back prior debts. Credit reporting agencies act as a clearinghouse of information on your past and current debt repayment track record. All of that is pretty helpful to a smoothly functioning (and well-priced) lending/credit market.
The only thing that's gone wrong here is a merchant is (to my very lightly informed opinion) abusing that system in a way contrary to the original intent. That will almost surely get cleaned up in due time.
The credit reporting system has long since gone beyond its original purpose and turned into a corporate tool of abuse. People are getting denied for jobs for their credit history.
Company A can report to the credit reporting agencies that they have an unpaid debt that has been sent to collections. If your furnace dies in the middle of the winter and you don't have enough cash on hand to buy a new one, you might attempt to put the purchase on credit. The store would check your credit status before opening an account with you.
In this case, the company filed a false report and will end up paying for it.
> Is it true that any random company I once did business with can call up a credit ratings agency and claim that I owe them money?
Anyone can report to a credit ratings agency. However, you first need to be approved by the corresponding agency, and each one has a process. It's similar to getting API access to a proprietary corporate API; they want to know who they're dealing with before they hand over the keys. For example, here are the instructions on reporting to Experian:
> What standards of proof do the credit agencies require?
They take your word for it once you've been established as an authorized reporter. In the event of a dispute, the credit reporting agency is required to open a formal investigation.
If you don't produce the appropriate documentation, they remove the item from the credit report. You may also be subject to various civil penalties and fines under the FCRA if the reporting error was egregious, malicious, or otherwise not merely a clerical error of minor import.
This was pretty surprising to me - it would be one thing if it were sent to a shady collections agency but it seems like the credit reporting agencies wouldn't be able to accept something like this.
This is a unilateral "fine", it's not an actual credit line that was taken out. Very strange, my guess would be that this company is breaking the rules for reporting actual credit issues.
There's only so much oversight such a bureau can have, especially if a company is willing to lie to them. According to Popehat, they've also done things like falsely list positive BBB ratings on their website, so it's not hard to imagine them coming up with some way to pretend the charge is legitimate.
Sad about two things. This didn't happen to me, so I don't have the standing to collect >$75k from this company for blatant FCPA and consumer law violations. And that no one has dropped dox on the principals of KlearGear.
. . .
"Michelman said the $75,000 compensation amount is in the high range of a typical award for acts in violation of the Fair Credit Reporting Act."
This is an old story now, already discussed extensively here on Hacker News. The new information here is simply that the couple has a lawyer, who can afford to represent them on speculation because of a federal law that allows recovering damages from a company that tries what KlearGear is alleged to have tried in this case. We'll know the final outcome after the litigation proceeds, but I predict a good result for the Utah couple.
The previous discussion eleven days ago
https://news.ycombinator.com/item?id=6742410
went back and forth over most of the issues raised by this story. Bottom line: the couple has to follow certain procedures to respond to a credit agency report about their behavior, and the credit agency report about their personal credit history seems to have other adverse information (reported in one of the sources discussed in the earlier thread). All's well that ends well, and I expect this case to end well for the couple and badly for KlearGear.