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Cox v. Accessory Outlet

Nondisparagement Clauses – In July 2014, Cindy Cox ordered an iPhone case from an online retailer called Accessory Outlet. When the tracking number Accessory Outlet provided indicated that the order had not shipped after ten days, Cox tried to cancel the order. Accessory Outlet refused. When Cox said she would contact her credit card company, Accessory Outlet demanded that Cox pay $250 under its fine-print “Terms of Sale” prohibiting “any complaint, chargeback, claim, dispute,” or threats to take any of these actions, within 90 days of purchase. The Terms of Sale also purport to prohibit Cox from complaining to the Better Business Bureau or making or threatening to make “any public statement” regarding the order.

Over the course of two days, the company sent Cox several emails threatening to report the $250 “debt” to credit reporting agencies and thereby to damage Cox’s credit score. Accessory Outlet promised that Cox’s debt “will continue to rise with every email and every second we dedicate to correspondence of any kind pertaining to your breach of the terms of sale.” The company also threatened to refer the “debt” to a collections agency, which Accessory Outlet said would call Cox’s home, cell, and work phones “continuously.” Accessory Outlet told Cox that it had enforced the terms of sale against “many individuals” and that Cox was “playing games with the wrong people and [had] made a very bad mistake.”

On August 27, 2014, Cox, represented by Public Citizen, filed suit against Accessory Outlet, seeking a judicial decree that the company’s “Terms of Sale” and Cindy Cox’s alleged debt were void, and seeking damages under New York’s Deceptive Practices Act for the threatening and harassing emails Accessory Outlet sent Cox. After investigation, Public Citizen discovered Accessory Outlet’s parent company Blue Professional Corp. and several of that company’s alter egos. On October 8, 2014, Public Citizen amended the complaint to name Blue Professional as a defendant and add three other online retailers it operates that reportedly engage in practices similar to those of Accessory Outlet.

The defendants never appeared to defend their actions, and the Accessory Outlet websites was “undergoing maintenance” and therefore inaccessible to the public after the complaint was filed. In August 2015, the district court granted Cox a default judgment on her claims, including treble damages and attorneys fees.