3 Companies That Do Not Get Online Reputation Management

Once again a company steps on a landmine of controversy by not understanding the rules of social media engagement.

May 30, 2014 at 6:51AM

Controlling the narrative is an age-old practice employed by politicians as well corporations. But in an effort to protect themselves from scurrilous and libelous critiques of their products and services, some companies have seemingly lost their minds with tactics that go beyond the pale.

Mediabridge Products is a recent example of a company that might have bankrupted itself after siccing its lawyers on a customer who left a fanciful, negative review of its routers, but others including General Mills (NYSE:GIS) have risked ruining the goodwill they've built up over the years by taking a legalistic tack against their customers.

The cereal maker, for example, was forced to back down from a firestorm of indignation that threatened to swamp its popular Cheerios brand after it tried to limit its customers' ability to sue if they merely "liked" its products on Facebook. However, KlearGear may have trumped them both with the retaliation salvo it unloaded against a customer who wrote a negative review of the company.

According to Ars Technica, a Utah man ordered two small items from KlearGear in 2009 as Christmas gifts, both totaling less than $20. After numerous times at reaching out to the company about the order, he finally spoke with a representative who said since they hadn't been paid for the order was canceled. The customer's wife, for whom the gifts were purchased, subsequently wrote a negative critique of the company on the RipoffReport website and savaged its customer service.

Compounding errors

Three years later, the owner of KlearGear, the Paris-based Descoteaux Boutiques, emailed the husband and demanded the review be taken down within 72 hours or pay $3,500 since he violated the company's "non-disparagement clause." After the customer refused to remove the review, KlearGear sent a collection agency after them, which subsequently damaged their credit, delayed their getting a car loan, and prevented them from getting a loan to fix a broken furnace. The couple subsequently filed a lawsuit against KlearGear.

In his ruling siding with the couple, a judge said not only did the couple not owe the company anything, but at a hearing scheduled for early June he will decide just how much KlearGear owes the couple.

Among the more egregious aspects of the case, aside from the insane PR policy of going nuclear on a customer, is the fact the "non-disparagement clause" KlearGear tried to enforce didn't exist at the time the couple wrote their review, but was inserted into its terms of service after the fact. That it sent a collection agency after them also ranks pretty high on the stink-o-meter.

More harm than good

These three cases are instances of companies trying to protect their corporate image, but in the process damaging it all the more.

In the case of Mediabridge, it may have killed its business because negative reviews of its products have swamped the positive ones and company also apparently violated the terms of service of Amazon.com by attempting to get the customer to remove that initial negative review. That's verboten at the e-commerce site and it's seller privileges were revoked, meaning the only place someone that actually wants to buy one of Mediabridge's routers now is through the company directly.

It's becoming a much more frequent occurrence that companies are fighting back against negative reviews. Winning lawsuits stemming from negative reviews on Yelp and Angie's List have made the rounds, but often those were found to be outright slanderous in nature. Yet as General Mills discovered, just because you can try to limit negative customer feedback doesn't mean you should.

Earlier this week, KlearGear's parent company said it will appeal the judge's decision. Part of the rationale behind it was that Descoteaux Boutiques never bothered appearing in court to defend itself, but it contends it wasn't properly served and of course would have answered the summons. No matter, by pushing its point and still seeking to hold the couple liable, it merely proves it has a tin ear and doesn't understand it's ruining its credibility and standing among consumers.

The point remains, wading into social media waters can help companies connect with customers, but when the tide turns against you it can quickly drag you under. Companies might want to control the narrative, but they'd be better off controlling their tongue before lashing out at their customers.

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Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Yelp. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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