Eliot Spitzer, now the top contender to be the next New York City Comptroller, has said he wants to use the office to pursue financial reform. He has a ready, obvious, and comparatively easy target: the private equity industry.
5 Companies That Excel at Screwing Over Customers
April 03, 2014
You would think torturing customers is so bad for business that companies would try to avoid it. Isn’t the invisible hand of the market supposed to bitchslap businesses that thumb their nose at the people who buy the stuff? Polls show 85 percent of consumers will retaliate against a company if customer service sucks, and the younger ones are likely to pour out their grievances on social media. Billions in revenue are at stake.
And yet… a recent “customer rage” survey shows that American consumers feel that they are getting shafted more and more. The truth is that markets fail us all the time. Too often, oligopolistic conditions and poor regulation conspire to allow companies to get away with all sorts of abuse, making it hard for the consumers to fight back. Some companies actually seem to be turning screwing consumers into a business model (see: Spirit Airlines).
Let’s take a look at five companies that are currently competing in the Customer Dissatisfaction Olympics.
1. Sprint
How do customers hate thee? Let us count the ways. Over at the Consumer Affairs website, you can actually read 2,366 accounts of rage, frustration and bewilderment with issues ranging from dropped calls to confusing plans to unexpected charges. Here’s a typical cri de coeur from a customer who attempted to deal with a simple issue of moving abroad and needing to cancel plans:
“I spent 7 hours on the phone to solve the problem. 7 crazy hours!” —Petro, Arlington, VA, March 15, 2014
Some people are so emotionally drained by the experience of dealing with customer service that they break down in tears:
“…Today I actually cried because I feel trapped in a service that can’t help me…” —Kimbra, Frisco, TX, March 11, 2014
Dealing with most cell phone companies is no picnic, but with reactions like this, it’s no surprise Sprint ranks dead last in a recent wireless carrier satisfaction ranking.
Sprint gets away with this poor treatment of customers largely because the cell phone industry is an oligopoly and customers have limited choices and get roped into unfriendly contracts and plans. The CEO of SoftBank, which just purchased Sprint, acknowledges the oligopolistic conditions and has a curious solution: Let Sprint get even bigger by gobbling up T-Mobile. Then T-Mobile customers can enjoy the same level of poor service! Regulators are quite naturally suspicious of this logic, but given their generally complacent attitude, Sprint might just be allowed to do it. Ah, the joys of unbridled capitalism.
2. Spirit Airlines
Spirit wins the prize for most customer complaints of any airline, and it has dedicated extraordinary effort to the project of bamboozling customers with outrageous fees. Spirit has mastered the art of charging what appear to be low prices and then extracting money through various sneaky practices. Its business model depends on customers not knowing where and how they’re going to get hit. Spirit makes 41 percent of its revenues in fees.
If you peruse the Spirit Airlines Twitter feed, you will see endless streams of passenger anger over such practices as charging $50 for a carry-on bag (and make that $100 if you don’t pay these skyway robbers at check-in). I just looked at the feed, and here are the three latest postings:
“$80 in baggage fees and choosing my seat fees! #spiritairlines #whatajoke #neveragain #wastingmoney
Pretti_N_Sadity10:38am via Twitter for iPhone”
“I will NEVER fly #SpiritAirlines again.
Luisohyes7:58am via Twitter for iPhone”
“RT @sapnam: Heart is breaking at seeing kids in line for #spiritairlines at #ORD—too young for such trauma #dontflyspirit #protectyouthsfrmspirit
Luisohyes7:57am via Twitter for iPhone”
It’s truly astonishing to see the amount of apoplectic rage directed at one company. How does Spirit get away with it? And how is it making record-breaking profits while doing it? Part of the problem is that America has put corporate profits and limited government over our access affordable and reliable air travel. As I’ve noted before, airline service in America is similar to what citizens of communist countries used to suffer in phone service. Our trouble started with deregulation, which has taught us that increased competition without adequate regulation is not much better than monopoly conditions.
Spirit Airlines CEO Ben Baldanza, among America’s most rapacious corporate predators, knows he can hop around from city to city, luring in new victims with cheap tickets to tourist hotspots like the Caribbean and Myrtle Beach. Some customers will learn to avoid the high fees, but if others fly into a rage, that’s OK, because there’s always another to fleece.
Not every company gets its own Onion parody, but Spirit did:
"'The FAA has come to the determination that Spirit Airlines treats its customers like pieces of shit and that everyone should boycott this airline,' the report read in part, adding that there are so many hidden fucking fees that it makes customers want to blow their brains out. 'The airline touts its low fares, but it costs $45 to check your bag at the airport, and if you don’t check the bag when you get your ticket, it costs a mandatory $100 at the gate. So the flight could end up costing over $300 anyway'....'You’ve got to be fucking kidding with this bullshit,' the report added."
The best part of all? Spirit Airlines will charge you to call customer service if you want to complain!
3. Time Warner Cable
Pity the customer of Time Warner Cable. Service frequently goes on the fritz, and should you dare to call customer service, you will be treated to an experience that would challenge the imagination of George Orwell.
After my TV recently refused to turn on, I called and spoke to three different customer service representatives, who each told me three different things, including the recommendations that I buy a new modem and that nothing could be done. Calls were dropped, rudeness seemed par for the course, and it wasn’t until I finally reached a supervisor that I learned I simply needed to unplug a wire for a couple of seconds.
Again, it is the oligopoly monster that allows Time Warner Cable to treat customers with such malice. And things are only going to get worse if Comcast is allowed to purchase the company, a deal currently under review by the antitrust division of the Justice Department. It’s kind of like two giant bullies joining forces to create one horrific Terminator. As Catherine Rampbell put it in the Washington Post, it is a deal “where America’s most hated company wants to join forces with America’s second-most hated company (Time Warner Cable and Comcast, in no particular order).”
A recent report by Marchex found that consumers are more likely to go on “profanity-laced tirades” while on the phone with their TV provider than with almost any other company they call. You can effing say that again.
4. Walmart
As Time magazine recently reported, Walmart gets abysmal marks on customer satisfaction among retail stores:
“No retailer had a worse ACSI [American Customer Satisfaction Index] score than Wal-Mart’s 71 for customer satisfaction. Not only did the company have the lowest score of any department or discount store, but it also scored just 72 when graded as a supermarket — the lowest in that sector as well.”
On the supermarket side, perhaps Walmart ought to consult Trader Joe’s about how to interact with customers: According to a new survey, Trader Joe's leads Consumer Reports supermarket chain ratings, while Walmart supercenters are at the bottom. Customers cited bad service, poor quality, and dirty stores as the major offenders.
Walmart’s problems are many and widespread. Recently, a wave of restocking issues gained media attention, as have reports of a labor force spread too thin.
On the Consumer Affairs website, shoppers call out the retail behemoth for being harassed by security, warranty problems, and rude treatment by employees. Of course, it’s not just customers who are unsatisfied with Walmart —employees are very tired of getting crap benefits and wages, so perhaps that explains their lack of enthusiasm.
For many customers, the price is right at Walmart, but everything else is very, very wrong.
5. Town Sports International
Town Sports International operates New York Sports Club as well as clubs in many large eastern cities, including Boston, Washington, D.C., and Philadelphia. If you don’t expect fancy and can handle the occasional hairball in the shower, this gym has fit the bill of cheap and convenient for many, including myself. But in recent years, management seems to have taken a nasty turn against its own customers.
In 2012, the company slapped a $29 “rate lock fee” on customer bills each January. In other words, it charges you for the privilege of not charging you more! Other small fees — tiny enough they hope you won’t notice them — creep into bills with no rhyme or reason. Contracts for plans and programs now contain fine print about the necessity to cancel in writing 30 days before the end of the term or they will go right on charging your credit card. Never mind that in many states, like New York, this kind of subscription system is unlawful unless the company informs you in writing that your credit card will be charged after the term you have agreed to.
One customer, Mike Murphy, had his credit card charged for over a year despite having called to cancel membership and submitting a written letter. In his long odyssey to try to get his money back, he found that New York Sports Club has received an “F” rating from the Better Business Bureau, in part because customer complaints are so badly handled, or not handled at all.
Often, the “member services” line puts you on interminable hold or the call is simply dropped. Sadly, employees at local branches are often hard-working and eager to please customers, and obviously feel uncomfortable about some of the practices management has adopted. Town Sports International clearly needs a good customer service workout.
Keep reading...Show less
