Episode 976: Terms Of Service : Planet Money An online review turns into a fine-print nightmare — until the victims fight back. | Subscribe to our weekly newsletter here.
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Episode 976: Terms Of Service

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Episode 976: Terms Of Service

Episode 976: Terms Of Service

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John and Jen Palmer love to buy each other little presents - figurines, desk toys. Tchotchkes are their love language. But a while ago, this got them into trouble.


What is the inciting tchotchke? What is the tchotchke that gets this whole story going?

JOHN PALMER: It was basically looking for something for Jen for her desk at work.

HOROWITZ-GHAZI: John goes online, finds this website called kleargear.com - Kleargear with a K, of course. It's just a website that sells, like, little toys for grown-ups. And John decides to order not one but two little tchotchkes for Jen.

JEN PALMER: I think one of them was a - one of the ones where it's the sand art, and then I think another one was one little perpetual motion toys...

GOLDSTEIN: Like the little silver ball things or something?

JOHN PALMER: Yeah, exactly.

JEN PALMER: Exactly.

JOHN PALMER: They were meant to be stocking stuffers.

HOROWITZ-GHAZI: The total cost is around 20 bucks. John pays with PayPal. Then a week goes by, two weeks; the sand art thing and the little click, click silver ball thing never show up.

GOLDSTEIN: So Jen gets involved. She tries to call the company, but she can't get anybody on the phone. She's getting the runaround on email. Eventually, John and Jen do get their money back from PayPal. And then Jen decides to leave an online review at a site called ripoffreport just to warn other people about Kleargear.

JEN PALMER: My husband ordered items from kleargear.com for Christmas presents. After several weeks went by with no delivery, he attempted to contact...

HOROWITZ-GHAZI: Jen pastes in this sort of absurd email exchange she's had with the company into the review. Then she hits publish. It goes up online, and that's the end of it.

JEN PALMER: Our response was, OK, we've put our experience out there for the world to see. We're good. We're done. We went on with our lives. We...

JOHN PALMER: We bought a house.

JEN PALMER: ...Bought a house, had a kid. And it was 3 1/2 years later. John was working from home, and I was upstairs taking care of our toddler. And all of a sudden, I hear John screaming bloody murder. And he's swearing up a storm, yelling, Jen, get down here. What in the - what's going on?

GOLDSTEIN: Jen gets downstairs, and John is looking at an email on his computer.

JOHN PALMER: It basically says it's from Kleargear's legal department, and it is saying that because you posted this and it's in violation of our non-disparagement clause, we are going to fine you $3,500 because you disparaged us online.

GOLDSTEIN: So it's a letter from a lawyer saying you owe Kleargear how much?

JOHN PALMER: Thirty-five-hundred dollars.

GOLDSTEIN: For what?

JOHN PALMER: For posting the truth about them online.

GOLDSTEIN: And what is your response?



GOLDSTEIN: Hello, and welcome to PLANET MONEY. I'm Jacob Goldstein.

HOROWITZ-GHAZI: And I'm Alexi Horowitz-Ghazi. Every day as we make our way across the Internet, we are swimming through a sea of legalese - terms, conditions, warnings. Most of us just click accept and move on without so much as a glance.

GOLDSTEIN: Today on the show - what happened when Jen and John got caught in a fine-print nightmare and fought it all the way to Washington.

So John has this email, remember, from Kleargear. It's saying that he and Jen had violated the terms of service, the fine print that we all agree to all the time whenever we do anything online. Specifically, it's saying there was a clause in the terms that said, you cannot leave a nasty review about us online.

HOROWITZ-GHAZI: But remember. It's been three years since they posted that review. They don't remember seeing any non-disparagement clause when they bought the tchotchkes, so they use this Internet archive site to look at the old terms and conditions from three years earlier. And that clause was not there when they tried to buy those tchotchkes.

GOLDSTEIN: But there is still that email from Kleargear threatening to fine John $3,500, which, of course, is a scary warning, so John and Jen started calling lawyers. And all the lawyers said basically the same thing.

JEN PALMER: Oh, sure. You know, give us a $5,000 retainer, and we'll see what we can do. And I'm like, dude, if I don't have $3,500 to give them, I don't have five grand to give you.

HOROWITZ-GHAZI: They couldn't pay any of these lawyers, so they just went on with their lives. A while later, they went to buy a car.

JEN PALMER: And we were sitting in the dealership, and the finance manager comes over to us and kind of loudly says, OK, well, we're trying to find you financing. But who is Kleargear? And why do you owe them $3,500?

JOHN PALMER: And both of us just facepalm (ph).


GOLDSTEIN: Because of this whole thing with Kleargear, John now had this, like, black mark on his credit report.

JEN PALMER: We fast-forward to October of that next year. Our hot water heater died on us. We used our savings to get that repaired. Three days later, our furnace goes out.

HOROWITZ-GHAZI: It's going to cost them thousands of dollars to get a new furnace and they just don't have it on hand.

JEN PALMER: We tried to get emergency financing. Every company I tried to go through turned us down. So finally, I am at my wit's end. It's October in Utah. My house has no furnace. I have a 3-year-old and thinking to myself, oh, my God, we're going to end up in - with a frozen house. And CPS is going to come and take my child away because I can't keep the heat on because of this stupid mark on John's credit, and there's nothing we can do. So finally, I mean, I am almost crying. I'm at work, and I have no idea what to do.

HOROWITZ-GHAZI: Their case was too small for the FBI, too strange for the local police. But, luckily, there's a certain kind of person who is perfect for helping people just like Jen.

JEN PALMER: My boss comes up to me and says, well, why don't you give KUTV's Matt Gephardt a call?


UNIDENTIFIED PERSON #2: There's one reporter in Utah who arms you with the information you need to protect yourself. Get help. Get answers. "Get Gephardt" - five nights a week on 2 News at 10.

JEN PALMER: So I called up "Get Gephardt," and I left them a really long message and explained to them the entire story. And the more I'm speaking, the more I'm just realizing how utterly ridiculous all of this sounds. I mean, you cannot make this up.

GOLDSTEIN: You're leaving it just like a voicemail?

JEN PALMER: Yeah, I think I had caught them like off-hours or something. And I think it was the next day, I get a call from Matt Gephardt.

GOLDSTEIN: Of "Get Gephardt"?

JEN PALMER: Yes. He calls me back and says, I believe you and I want to help. And all of a sudden, I saw the light at the end of the tunnel.


UNIDENTIFIED PERSON #3: If you get horrible customer service from a company, you will likely tell people about that.

UNIDENTIFIED PERSON #4: Yeah. Get this, though. A company is ordering a Layton couple to pay thousands all because they don't like the review they posted online.

JEN PALMER: It aired, like, on a Tuesday. Three days later, the story has gone viral. And by viral, I mean England and France and Australia and China and Canada.

HOROWITZ-GHAZI: And in the middle of all this, John and Jen get a call from a lawyer named Scott Michelman at a nonprofit called Public Citizen. He said he wanted to take their case, and agreed to do it pro bono. The lawyer got John's credit report fixed, and he sued Kleargear in federal court.

JEN PALMER: We show up to court, and he's got his fancy lawyer formulas that they do to calculate things like real damages versus pain and suffering and all of that.

GOLDSTEIN: Basically, how much is he going to ask for?

JEN PALMER: Three hundred and seven thousand dollars. So we got to court, and, of course, Kleargear doesn't show up. And...

HOROWITZ-GHAZI: So it's just you guys and the judge hanging out?

JEN PALMER: Pretty much. It's - I mean, the judge still sat and heard our story. We still gave our testimony, laid out, you know, all the damages. And as the judge is hearing all of this, he decides. He's like, you know what? I've heard enough. I don't need to take this under advisement, I'm going to give you everything you're asking for and the lawyer's fees on top of it. And I remember sitting at the table and kind of, like, whispering, did he just do what I think he just did? The lawyer's just going, shut up. Shut up. Shut up. And, you know, and he went ahead and gave us the judgment right then and there. But even with this huge number that neither of us could have ever dreamed of, we knew we were never going to see a dime of it.

HOROWITZ-GHAZI: You couldn't even get them on the phone. How are you going to get $307,000 plus lawyer's fees out of them?

JEN PALMER: Exactly. But this was a significant enough number to at least deter anybody else from attempting the same thing on somebody else. So this was huge, and we knew this was making an impact.

GOLDSTEIN: And you would think that would be the end of the story.

JEN PALMER: You would really think.

GOLDSTEIN: And yet there is one more truly surprising twist in the Palmer story. We will hear about that and have some deep thoughts about terms of service in a minute.


GOLDSTEIN: So I think one reason that Jen and John's story went viral is that what happened to them could have happened to anybody, to any of us. You know, all day long - it feels like every day we are just clicking accept, accept, accept, agree, agree, agree to terms of service, and we essentially never know what's in there.

HOROWITZ-GHAZI: It feels like we've gotten to a place where, in order to actually be an informed consumer, you basically have to be a contract lawyer with an absurd amount of free time on your hands.

GOLDSTEIN: And as we started looking into this and researching it, one of the really interesting things that we found out was this universe we live in now, it actually comes out of this really reasonable sounding sort of well-meaning place, right? There is this basic idea that is, it's a good thing when companies give consumers - give customers, give us - information.

HOROWITZ-GHAZI: We talked about this with Omri Ben-Shahar, he's a law professor at the University of Chicago, and he co-wrote a book about this stuff called "More Than You Wanted To Know."

OMRI BEN-SHAHAR: If the problem is people made bad decisions because they did not have good information, then the solution seems obvious. Give them information. It doesn't offend any ideology. Liberals like it because it protects consumers. It protects the little person against the power of the companies. And conservatives, too, believe that if you give people information, then you don't need to do any more intense intervention in the market. The campaign for full and complete disclosure is supported by everyone.

HOROWITZ-GHAZI: So if a product is dangerous, the government makes the manufacturer add a warning label.

GOLDSTEIN: If a loan is complicated, make the bank explain the details to the borrower.

HOROWITZ-GHAZI: If a tech company is going to sell its customers' data, make the company tell the customers.

GOLDSTEIN: This is all very reasonable. But, as a result, for decades, terms of service and warnings and loan documents have been getting longer and longer in order to provide more and more information to us, the consumers.

HOROWITZ-GHAZI: Does anybody actually read these things?

BEN-SHAHAR: Nobody. There is enormous amount of evidence showing that nobody reads. A colleague at NYU actually looked at how many people click on the terms to read them, open the pages. She found that something like one in every thousand people look at it. Even the simplest of disclosures are not read. If they are read, they are not fully understood. If they are read and understood, they are not used. And if they are read, understood and used, they are not used well.

GOLDSTEIN: So what does that mean, I mean, that we have this huge sea of terms coming at us every day that pretty much nobody is reading? Like, what do we do?

BEN-SHAHAR: Well, we have to look for solutions other than disclosure, I guess, right? If you think that they are particularly grave problems, you may want to think about solutions that are more than placebo.

HOROWITZ-GHAZI: Omri says, look, terms of service just don't work.

GOLDSTEIN: And so he says, if there's something that's really bad, you shouldn't try to solve it with disclosure. You shouldn't tell companies this thing is OK as long as you tell customers that you're doing it. He says, in extreme cases, maybe you should just ban things outright, prohibit them. Which brings us back to Jen and John's story.


GOLDSTEIN: A couple of years after their big day in court, Jen got a call from the lawyer who had sued Kleargear on their behalf.

JEN PALMER: He says to me, Senator Thune has drafted a bill to make non-disparagement clauses illegal. They want you to come and testify in front of the Senate Commerce Committee as to why these are so important. And my jaw dropped.

GOLDSTEIN: So Jen went to Washington.

JEN PALMER: I remember I was in the taxi. We were - and it was getting up to Capitol Hill. And we turned a corner, and I see the Capitol Building right in front of us. There was one thought that went through my mind, and it was (singing) I'm just a bill. Yes, I'm only a bill. And I made it here to Capitol Hill.


JACK SHELDON: (As Bill, singing) Well, it's a long, long journey.

JEN PALMER: I'm like, oh, my God. I'm in "Schoolhouse Rock" (laughter).


JACK SHELDON: (As Bill, singing) It's a long, long wait while I'm sitting in committee. But I know I'll be a law some day at least I hope and pray that I will, but today, I am still just a bill.

GOLDSTEIN: A few minutes later, Jen Palmer is sitting in committee, about to testify for the Senate.


UNIDENTIFIED PERSON #5: Next up is Ms. Palmer. Share your story.

JEN PALMER: Chairman Thune, Ranking Member Nelson and members of the committee, thank you for inviting me to testify today. My name is Jen Palmer, and my family's ordeal with a bullying company that tried to fine us for a negative review demonstrates why non-disparagement clauses should be prohibited.

GOLDSTEIN: Not long after that, Congress passed the Consumer Review Fairness Act. The bill made it illegal for companies to bar their customers from posting honest negative reviews.

JEN PALMER: It was one of the last bills President Obama signed, turning this into law. And I just looked at John. I'm like, oh, my God, we did it.

HOROWITZ-GHAZI: What do you feel, like, each of you kind of are taking away from this whole experience? Or what have you learned by going through it?

JOHN PALMER: Biggest thing that I've walked away with is, don't mess with Jen.


JEN PALMER: Thanks, dear.


GOLDSTEIN: As far as we can tell, Kleargear with a K has disappeared from the face of the earth. No website. We tried to call them for comment, but the two phone numbers we found didn't work.


GOLDSTEIN: Have you fought some weird Internet nightmare all the way to the United States Senate? Let us know. We're at planetmoney@npr.org. We're on your various social media platforms @planetmoney.

HOROWITZ-GHAZI: We also have a newsletter.

GOLDSTEIN: That kind of blew up the Internet this week. Why is America losing the toilet race to Japan? Sign up at npr.org/planetmoneynewsletter.

HOROWITZ-GHAZI: Today's show was produced by Darian Woods, James Sneed and Liza Yeager. Our editor is Bryant Urstadt, and our supervising producer is Alex Goldmark. I'm Alexi Horowitz-Ghazi.

GOLDSTEIN: I'm Jacob Goldstein. This is NPR. Thanks for listening.


JOHN SHELDON: (As Boy) He signed your bill. Now you're a law.

JACK SHELDON: (As Bill) Oh, yes.

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