The Customer Service Survey

Arbitration

by Peter Leppik on Mon, 2007-10-15 01:00

This is a little far afield of my usual topics of survey technique, customer service, etc., but some consumer advocates have begun to notice the creeping ubiquity of binding arbitration clauses in customer agreements.
Ignoring for the moment the legal enforceability of many of these contracts (especially the "shrink wrap" type agreements), there have been a handful of court cases recently finding that binding arbitration clauses are unenforceable in certain consumer contracts on the theory that they are "unconscionable." In other words, if given a choice and fully informed of the implications, a rational consumer would never agree to mandatory binding arbitration.

It's not hard to understand why: binding arbitration is fine in theory--a fast, fair, and inexpensive way to resolve disputes--but in practice it heavily favors the more sophisticated party (which is always the company) and lacks many of the protections of the court system such as formal due process and the right of appeal. If the process is run well this might not matter, but in practice, well, it can go terribly awry (via Consumerist).

What does this have to do with customer service?

There are too many companies which have the attitude that their customers are the enemy, rather than equal partners in the company's success. You see this everywhere: IVR systems designed to "contain" customers rather than serve them; punitive return and exchange policies; indifferent support; "gotcha" fees; and heavily one-sided arbitration processes.

The irony is that many of these problems are not terribly expensive to fix, and they cause huge amounts of customer frustration and anger (along with the occasional lawsuit). Companies which have a reputation for customer friendly policies are able to command premium prices and fanatical customer loyalty.

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