$1.44 Dispute Reveals Billions at Stake in Online Customer Feedback

PHOTO: EBay seller Med Express wanted to remove negative comments written by a South Carolina resident named Amy Nicholls. Nicholls filed a counterclaim on April 18, 2013.

With the growth of such customer review sites as Yelp and TripAdvisor, and e-commerce sites like eBay, anyone with access to the Internet can potentially make or break a company's reputation. But how companies respond to online customer feedback, especially negative comments, can make all the difference.

Take eBay seller Med Express Inc., which sued the online auction site and one of its customers who posted a negative comment about the company on eBay.

The lawsuit—and a countersuit from the customer—was over a $1.44 postage due charge, according to court records.

It all started when Amy Nicholls, an office administrator for a manufacturer in Greenville, S.C., bought a microscope light for her employer in February from Ohio-based Med Express Inc., which sells refurbished medical equipment on eBay.

After paying $175 plus $12 in shipping for the item, Med Express said in the court filing that it "took the equipment to the Valley City post office, where it was weighed and shipped to Nicholls."

Although Med Express claims that it paid the full shipping cost, "for some reason unknown to Med Express, the equipment was received by Nicholls with $1.44 postage due," according to the court record. Med Express apologized immediately and offered to reimburse Nicholls for the postage due, but she went ahead and posted a negative comment about the charge on eBay's website: "Order arrived with postage due with no communication from seller beforehand," she wrote.

"My concern was never about the money, but the hassle," Nicholls said. "I was trying to prevent it from happening to others."

That comment, according to the court filing, resulted in lower ratings for Med Express in the Detailed Seller Ratings section of eBay's Feedback Forum, and an unfavorable feedback profile for Med Express.

On March 25, Med Express Inc. filed a claim against eBay and Nicholls, asking for an injunction to remove the negative comment, accusing Nicholls of "falsely and deliberately" slandering Med Express' good name and reputation. It sought to have the comment removed from eBay.

A spokeswoman for eBay declined to comment to ABC News about this case, saying eBay had not yet been served with the lawsuit.

News of the suit spread across the Internet, and last week, Paul Alan Levy, an attorney with the Public Citizen Litigation Group in Washington, D.C., blogged about it, calling it "untenable."

"The bottom line here is that the feedback she posted regarding Med Express Inc. constitutes protected speech under the United States, Ohio and South Carolina constitutions. This lawsuit has no basis in law or in fact," he wrote.

Levy of the Public Citizen Litigation Group, said Richard Radey, president of Med Express Inc., initially did the right thing by responding to Nicholls comment on eBay. The first thing a seller should do when faced with online criticism is to respond to the criticism, he said.

"If you don't persuade the critic, you might persuade your other customers. They would see you are dealing with criticism in an appropriate manner," Levy said. "But where he went wrong, in my view, was that he didn't trust his future customers to read what he has to say, and he proceeded try to take the criticism down."

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