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Want To Warn Others About A Crappy Company?

Everyone agrees that angry customers are bad for business—Netflix and Bank of America are two recent victims of consumer outrage.

 

Whether it’s a new product dies after two uses, a service contractor is a no-show, or a business imposes new fees for an old service, burned customers want more than a refund.

They want revenge, so they go to the one place where they can tell the world: The Internet.

The angry customer’s path of choice is both social media and for-profit consumer complaint websites that quickly get the word out about their unhappy experiences.

Companies are fighting back, however, with lawsuits and new online guerrilla tactics. They’re even hiring online reputation management companies that have arisen to help them.

Of the dozens of sites out there, my3cents.com, complaintsboard.com, and pissedconsumer.com, which launched in 2006 and 2007 respectively, attract the lion’s share of complainants, according to statistics compiled last year by the nonprofit Consumer Federation of America (CFA).

Other sites target specific industries—airlines, Airline Complaints airlinecomplaints.org, financial advisors, BrokerCheck cars, AutoBeef and lawyers and doctors Avvo. Angie’s List, one of the first customer review sites, draws people who want to review local service providers, and announced it surpassed one million members last month.

Some consumer-built sites target one company, sometimes calling for their downfall, like comcastmustdie.com or noboa.blogspot.com about Bank of America complaints.

The federal government is jumping in too—in March the Consumer Product Safety Commission launched Safer Products, SaferProducts.gov allowing consumers to post information on goods that pose safety risks.

Facebook and Twitter also have become breeding grounds for consumer complaints—angry Netflix customer tweets figured in the company’s reversal of its disastrous price structure decision, and a Facebook campaign to get people to switch to credit unions probably helped convince Bank of America to quash its monthly $5 debit card fee on November 1.

Connecting consumers online is creating more corporate accountability, according to CFA. The nonprofit’s report last summer noted that the information on these sites is rarely available from traditional complaint handlers like the Better Business Bureau, which typically reveals whether there are complaints against a business but not the details.

“There are many, many company abuses against consumers where there’s no redress,” says CFA’s director, Stephen Brobeck. “I think this is fundamentally a good thing because consumers are relatively powerless dealing with a large company.”

Randi Busse made the new complaint media work for her after a recent visit to a restaurant that’s part of a national chain. When the food and drinks took forever to arrive, she went home and posted a note on the company’s Facebook page: “The food was good but the service wasn’t, and I’m not sure I’m going back.” Within 12 hours, a company representative replied to apologize and Fedexed her a $30 gift card.
When consumers compare notes, they can save money too. MSNBC.com columnist Bob Sullivan writes that when an electric window failed on his out-of-warranty 2007 Jeep Liberty, he checked AutoBeef’s site and found out that Chrysler was honoring out-of-warranty claims if drivers followed the proper complaint procedure. That saved him $500 on repairs.

But complaint crowdsourcing also can hurt the innocent. Jim Olenbush, owner of Cantera Real Estate in Austin, Texas, found that out two years ago when he fired an employee for inappropriate behavior. A few weeks later, he spotted a new comment on Cantera’s business posting on Google Places its headline was “Austin’s Best Gay-Only Real Estate Firm.” Olenbush says the firm works with any customer: “We want to help everyone we can to buy and sell property—any nationality or sexual orientation.” After checking around, he determined that the post was the work of the ex-employee. But he can’t get it deleted—Google let him write a rebuttal but doesn’t remove comments, he says. The post has generated some awkward conversations with first-time customers, and Olenbush wonders whether it’s affected his bottom line.

Competitors also can misuse complaint sites to damage a rival’s reputation: “We have seen some instances where competitors are attacking each other with fake reviews,” says Rhea Drysdale, co-founder of Outspoken Media, which offers online marketing and reputation management services. Indeed, one guy offered services on a freelance job site to “write up to three negative reviews for you with three different profiles against your competition for $10.”

Companies are firing back at online complainants in a range of ways. An increasing number are suing—hitting consumers who post what they believe to be unwarranted complaints with “strategic lawsuits against public participation,” or SLAPPs. Even if the company doesn’t win, the idea is to dissuade others. (Anonymity doesn’t necessarily protect commenters, according to Consumer Reports.) For online reports that can be proven false or defamatory, a Dallas-based lawyer is getting court orders for his clients and then taking those to Google to get the search engine to remove its link to the report, effectively killing its traffic. And Medical Justice, a company that helps doctors prevent malpractice suits, advises its member doctors to have patients sign a copyright agreement covering any online post the patient might write about the doctor. That gives the doctor the right to remove a customer’s post. In response, two law schools have started their own site warning consumers to refuse to sign.

Other firms are turning to the growing number of online reputation management companies, which help firms control negative content about them on the web. Often that means building search engine optimization tools that push negative information about a company further down the search list. Other times it means using new media for more proactive public relations—getting out positive messages about what the company is doing well, according to Owen Tripp, co-founder of Reputation. But Ed Magedson, head of the complaint site Ripoffreport, says reputation management companies aren’t always successful. “I know of none of them—none—who can do exactly what they say they’re going to do.”

With consumer activist sites on one side and reputation management firms on the other, the battle on the web sometimes sounds like a political campaign. Many sites, including CompanyNameSucks, have tried to create a fair playing field, giving space for both complaints and rebuttals. Post-ers must make their case in 140 characters or less, and they don’t have to give their name or email address. If a company wants to rebut a complaint, they sign up for a free business account and can use more than 140 characters to respond, according to site spokesperson Chris Mitchell. Angie’s List gives their employees special training to identify heavily biased or resentful reviews.

But by one metric, all of the cyberwarfare may be helping consumers. The yearly American Customer Satisfaction Index (ACSI), which since 1994 has measured buyer happiness levels, has climbed from about 72 to 75.5 since 2001. And consumer satisfaction is a key variable in stimulating consumer spending according to a 2010 study in the Journal of Marketing Research. Though there are many variables that affect consumer spending, economic uncertainty being one of them, in normal economic circumstances, a high consumer satisfaction level can increase consumer spending by 2.8 percent. So both sides should be pleased even if they don’t like each other—the customer isn’t always right, but it doesn’t hurt to let them think they are.

This post originally appeared at The Fiscal Times.

 

 

Around The World, Younger Workers Are Happier, But They Also Want To Leave Their Jobs

Image: emilio labrador

 

Why The Cain Campaign Can't Keep Their Story Straight During This Crisis

Image: @pwgavin

No one in Washington thinks Herman Cain is doing well quashing these rumors about old sexual harassment suits.

 

His story keeps changing. He lashed out at rivals. And his natural allies are questioning his competence.

So why are Cain and his campaign failing to put this to bed? His team knew about the Politico story for ten days, and Cain himself thought these allegations would be a campaign issue in 2003 when he ran a campaign in Georgia.

J.P Freire, Senior Communications Strategist at New Media Strategies explained it to us in an e-mail.

a.) They don't have all the information on hand because they no longer have access to the very specific facts (and nuances) of the situation.

b.) Their memory is foggy regarding certain aspects, and they fear misspeaking about the issue.

c.) Their staff is at war with each other over what narrative to put out there, with the attendant risks of each approach. Who will contradict what we say? Will someone else show up? Will this only encourage others to make fraudulent claims? What is the credibility of the accuser?

d.) Their staff isn't, uh, organized the way a traditional (read: real) campaign staff would be organized, and thus less accustomed to these kind of crises, leading to an even *greater* tug-of-war. (Read Shakespeare's histories.)

e.) They are in denial about their own behavior in general and don't fully disclose to anyone, let alone campaign managers and wives. Why would you think that would change when talking to the press?

Bottom line. Candidates have trouble facing the truth about themselves. And it is difficult to impose message discipline on such a small nimble campaign.

Get ready for a bumpy ride.

 

Would Having More Women On Boards Lead To Less Excessive Salaries?

Image: AP

After weeks on the streets worldwide, the “Occupy” protesters – with their focus on corporate “greed” – may have achieved one thing so far.

 

In Britain, they likely pushed the Conservative prime minister to propose more women be placed on governing boards of financial firms as a way to reduce high salaries and bonuses.

Companies with more female directors, said David Cameron, would be less likely to practice “the usual sort of rotating list of men patting each other’s backs and increasing the level of remuneration.”

A corporation’s methods of setting executive pay, he told Parliament Wednesday, should not be done by a “closed circle of people.” Women would bring more diverse views and a wider discussion of what is excessive pay.

He’s just guessing, of course, based simply on gender stereotypes. Women executives, in general, do ask less often for pay raises than men. But whether female board members would spread profits more evenly to company stakeholders remains unproven.

Other ideas may work better. Mr. Cameron, like many others, suggests companies release information on pay levels and give shareholders more authority over pay. Similar structural reforms would shake up corporate practices that have led to high income inequality. And attracting more women to boards will require more of them to earn MBAs and enter the business of high finance.

The task of defining “excessive” pay is difficult, but since the near-meltdown of Wall Street in 2008, it’s become a controversial topic. It would be less difficult with more transparency and accountability about a company’s compensation decisions.

Given the long history of pay discrimination, women serving on boards would bring a needed perspective on fair pay. Europe is already moving toward more women in the boardroom. In 2003, Norway began the trend by setting a quota of 40 percent for female directors and has already achieved it. While such a forced method may satisfy some, based on one study, the results were not so satisfying.

A University of Michigan study this year found an average 20 percent drop in the stock prices of Norwegian companies that brought in relatively inexperienced women as board members. “The quota led to younger and less experienced boards, increases in leverage and acquisitions, and deterioration in operating performance, consistent with less capable boards,” the study found.

That negative experience may change over time as more experienced women join boards. Britain is avoiding a strict quota system in favor of voluntary targets. Last February, the government asked the boards of the top 100 companies to be 25 percent female by 2015. So far, progress has been slow, with only a slight rise to 14 percent from 12.5 percent last year.

“Everyone, whether they are in public life or in private enterprise – they have got to be able to justify the decisions they make about pay,” says Cameron.

Perhaps reducing male “group think” in boardrooms about pay levels is one good start.

This post originally appeared on The Christian Science Monitor.

 

El-Erian On Europe: 'Unfortunately It's A Mess', And Now Things Are Worse Than Before The Last Bailout

Image: Bloomberg TV

PIMCO's Mohamed El-Erian was on Bloomberg TV this morning talking Europe.

 

The most interesting part: Him saying that things are worse now than before last week's summit, since now credibility has been lost.

You can watch the video here.

The partial transcript was supplied to us by Bloomberg TV, and is below.

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El-Erian on the situation in Europe and the G20 meeting in France:

" It is both disappointment and concern. It is striking that Ms. Merkel came out this morning and said they could not agree on the easy part, and the easy part was enhancing the IMF resources to help Europe. I am both worried and disappointed so far. Hopefully something will happen in the next day or so, but the signals are not good."

" We need four things. We need an agreement on Europe. We need to stabilize the European situation. Second, the world has to come together and agree on a growth and employment pact. Just like it did in April 2009 when there was a financial crisis, today we have an economic crisis and an employment crisis. We need to see different countries coming together with a common purpose. Third, let's not forget the hot spots in the world like North Africa. We need something there. Finally, there are longer term issues that are just as important, like climate change. That would have been an original agenda, but the G20 got hijacked by Europe."

On recently returning from Europe and his assessment from having been there:

" Unfortunately, it is a mess. There are three parties to a solution and all three are unraveling. There are the debtor countries and they are starting to have even bigger political issues. There are the official creditors and they cannot agree on providing support. And then there are the private creditors. It is not sure that they will get all of the banks to agree on the 50% reduction for Greece, which is the minimum Greece needs. So I'm afraid it's a bit of a mess out there."

On whether Europe is worse off now having gone through the agreement on Greek debt last week:

" We are [worse off now], because every time you get to an agreement and it unravels, the credibility of the process is undermined. Keep the image in your of the snowball rolling downhill. The problems get bigger and it becomes even more difficult to control the snowball. We cannot afford disappointment after disappointment. Europe needs to turn a corner and start building the basis for a solution."

On European leaders questioning whether or not they should belong in the euro:

" You are getting leaders saying strange things. It started with Mr. Sarkozy last Thursday saying Greece should not be in the euro zone. Now you have questioning left, right, and center. The leaders need to get on the same page. The narrative is important here. When there are difficulties that there is a conflict between regional priorities and national realities. That is what we're seeing in Italy. That is what we're seeing in Greece, countries like Germany and France as well. This is a very delicate period."

On today's jobs report:

" The good news is that the report in relative terms is better than expected mainly because of the revisions to August and September. The bad news is that we are still in this unemployment crisis, so no, it does not do enough to remove the risk of stall speed, which is growth but not fast enough growth. We need to see much higher employment creation to get over this issue."

On what it will take to achieve faster growth in the U.S.:

" We have fundamental structural problems in the labor market, housing market, credit market. We don't have enough infrastructure. These are a series of structural issues. We also have to reconcile medium-term fiscal reform with short-term stimulus. There are some big issues that are not as yet addressed sufficiently, certainly not addressed in a comprehensive manner."

On whether there is an increasing risk that the U.S. is losing control of its own economy because of the crisis in Europe:

" The reality is that we live in a globalized economy. Europe is a major economic area. It is an important trading partner. European banks are an important part of the financial situation. No country, whether it is the U.S. or China, is totally immune from what is happening in Europe. The important thing is to be able to navigate it and that depends on your internal dynamics. We are not immune from Europe. Nobody is in the world, but different countries are better or less able to navigate it."

On how central banks have been handling the situation so far:

" They have been doing heavy lifting. The Fed in particular has been the only policymaker really in play. The problem is they don't have enough instruments. You must always remember that central banks are monetary institutions. They can only be a bridge to somewhere. In order to be a bridge to somewhere good, you need other policymakers to also contribute. That is what has failed Europe and the U.S. so far."

On the October market rally and whether we won't see activity like that for a long time:

" This is an incredibly headline-driven market, a macro-driven market, as opposed to a bottoms up market. What we should expect is enormous volatility. We suggest to investors to play general defense and selective offense. I think it's important to be generally defensive because the world is very fluid, but there are values out there."

On whether there's more value in the U.S. than in Europe right now:

" I see value where balance sheets are strong, where companies are exposed to growth in emerging markets and where they're relatively immune to erratic policymaking. That's where value is and it's all over the world."

 

So messy ah? LOL!

 

CHART OF THE DAY: The Scariest Jobs Chart Ever



We like to run this classic Calculated Risk chart every month after the non-farm payrolls report, but that's because it's so shocking to look at each time.

What it does is compare every post-WWII recession, and look at the progression of job losses from the beginning of it, all the way down to the trough, and then through the comeback.

As you can see, this recession hasn't been like any other. First, the collapse in unemployment has been far deeper.

Second, the comeback has been incredibly mediocre, not at all v-shaped like in past recessions.

Image: Calculated Risk

Image: Calculated Risk

 

The Next Big US-China Fight: This One Might Get Ugly.

You know I don’t like to be the bearer of bad news, a buzzkill doomsayer like those short-seller assholes. However, I do feel responsible for reporting on the news as is, without filtering it through rose-colored glasses.

 

So it comes with a bit of trepidation and sadness that I have to relay this bit of information:

China on Friday unveiled its three-step plan for phasing out energy-inefficient incandescent light bulbs in an attempt to promote energy conservation and emissions reduction.

Imports and sales of 100-watt-and-higher incandescent light bulbs will be banned as of Oct 1, 2012, Xie Ji, deputy director of the environmental protection department with the National Development and Reform Commission said at a conference.

This will be followed by a ban on imports and sales of 60-watt-and-above incandescent light bulbs starting October 1, 2014, he said.

You gotta admit, her bulbs are rather nice.

I know, I know. It’s a scary situation. For those of you who have been living under a rock for most of this year, you may not be familiar with this issue or why this has the potential of throwing an explosive, radioactive wrench into the bilateral diplomatic works. Allow me to explain.

The U.S. passed the Energy Independence and Security Act of 2007 during the Bush Administration, which included new energy efficiency standards for light bulbs.

The resulting political shitstorm has been dramatic:

The law, which sets standards to make the bulbs more efficient and reduce electricity use, has been derided by Reps. Michele Bachmann, R-Minn., Joe Barton, R-Texas, and Rand Paul, R-Ky., and Sen. Mike Enzi, R-Wyo., as Exhibit A of the liberal assault on the free enterprise system.

This is a serious group that includes a Republican presidential hopeful. And they aren’t alone. Texas Governor Rick Perry, also running for president, signed a bill into law that purports to nullify the U.S. federal legislation. Sure, it’s unconstitutional, but the status quo was unacceptable to Texans. After all, nowhere in the Bible does it say that Jesus used a CFL bulb.

And that wasn’t the end of the story. Rep. Barton (R-Texaco) earlier this year also fought back:

In 2011 Rep. Joe Barton of Texas and 14 other Republicans joined to introduce the Better Use of Light Bulbs Act or BULB Act (H.R. 91), which would have repealed Subtitle B of Title III of the Energy Independence and Security Act of 2007. Barton was opposed to regulation, while Rep. Michael Burgess pointed to jobs purportedly lost to China and voiced a fear of mercury problems resulting from CFL use. On July 12, 2011, H.R. 2417 failed to pass by the required two-thirds majority in the U.S. House.

But here’s the kicker. The House vote was 233 – 193 (voting “Yea” was another GOP presidential candidate, Ron Paul). In other words, although it failed to get a 2/3 majority, it was still passed with a majority of the House, meaning that most House members think Americans have a God-given right to buy incandescent light bulbs.

The media was also on their side. Well, at least Fox News and some blogs:

Let’s talk a little bit about something known as the Better Use Of Light Bulbs Act, B-U-L-B Act, later on today in the House of Representatives they’re going to bring this up. And what it is, is it’s — they’re going to try to repeal — you know, Congress passed that kooky law that said incandescent bulbs, like this, got to go away got to use those pigtail things that are made in China that have mercury in them, instead of the bulbs made by American workers. [Fox News, Fox & Friends, 7/11/11] (Media Matters)

So where does that leave the U.S.-China relationship? Well, according to www.fakechinahearsayrumor.com, after hearing about today’s NDRC announcement, Rep. Joe Barton, overheard in the men’s room at a D.C. Taco Bell, threatened retaliation:

Not only don’t those Godless Commies recognize Jesus Christ as their Lord and Savior, but now they’re going after incandescent bulbs? I bet they’ll think twice about that when Congress blocks all Chinese student visas. While I’m at it, maybe I’ll cut off all corn and wheat exports and order the FBI to investigate Panda Express. Maybe I’ll even get the IRS to go after that artist guy for his U.S.-based income. Wait, I think somebody beat me to that one.

Look, next year is an election year. Obama is circling the political drain and the Republicans already control the House. It’s very possible that a pro-choice candidate (i.e., choice of incandescent or CFL) will get in with a Congress predisposed to do the bidding of the bulb lobby.

Once they get their own house in order, revising U.S. law, it stands to reason that China trade sanctions will follow, along with a possible naval blockade of ports used to export CFLs and/or drone strikes against CFL factories.

I don’t know about you, but I’m already winding up my business and looking to settle down in another hemisphere.

 

The Dow Is Off 143, Italian Yields Are Blowing Out, Jefferies Is Falling, And Berlusconi Is Sounding Nuts

This is proving to be a very hairy day.

To start, the Dow is off 135. At one point, after the non-farm payrolls report, futures were in positive territory, but all that's been reversed.

It seems the situation in Europe is just too grim for US stocks to ignore.

The most obvious sign of the grimness is the Italian-German 10-year bond spread, which continues to blow out. Nobody has any faith in Italy.

Not helping the matters is Silvio Berlusconi, who, frankly, sounds a bit delusional, admitting that the IMF has offered Italy assistance, while claiming that everything is great in Italy because -- seriously -- the restaurants remain full.

Evidently he doesn't put much weight in this morning's disastrous ISM Services number, which basically confirms a recession.

Of course, it's not just Italy that's seemingly in recession. German factory orders also had a big splat today.

Finally, going back to the domestic scene, Jefferies shares are falling, losing 6.2%, as it can't escape that nagging feeling, which has been going on for a few days now, that it's in trouble due to Europe.

 

 

 

 

 

 

 

Dow will be down tonight

 

Crude extend the bullish run into third session this morning

Crude oil futures are trading with an upside bias into the European session with continued focus on the debt-laden Greece, the progress among the G20 leaders, and U.S. jobs report all supported by relief that the Greek referendum will not take place.

Crude oil built on yesterday’s gains when the contracts rallied 1.7% on news that Greece will not hold the referendum and Prime Minister Papandreou stepped back from the call with agreement that the opposition will back the new EU bailout.

December futures are currently trading higher by 0.17% at $94.22 rebounding from the low of $93.60 and off the high set at $94.49 a barrel.

Investors are closely watching the developments in Europe with one eye on Greece and the other on Cannes. The progress seen is that Greece might avert default for now and go back to the only accepted path, which is the EU support and bailout and avoid falling out of the euro. Papandreou said that it was never about the referendum and backing from the opposition for the new bailout and the consensus negates the need for the referendum, and finance minister Evangelos Venizelos also said to lawmakers in Athens yesterday that the referendum will not be held as he lead the opposition in the part against the premier.

Still, the eyes remain on a confidence vote in parliament in Greece, where reports said that if the government wins the confidence vote Papandreou agreed to step-down to make way for a coalition government to secure the political stability and avoid political vacuum or early elections for now. The government should secure the agreement for the new bailout and that is the paramount importance before they take the decision to hold new elections.

Markets found the news positive, and the race to contain the crisis a positive indication that might save the global economy from landing into a deep harsh recession. They also welcomed the ECB’s decision to cut rates for now to ease the economic downturn, especially as Draghi said that Europe might be heading to a mild recession.

The developments in Greece and continued efforts from the G20 leaders to contain the crisis are supporting hope in the market and continued crude gains. The leaders ended their first day of meeting with the debt crisis still dominating the agenda, as they feel the recent setback in Greece forced European leader to miss the deadline given and talks focus on utilizing global support to ease the strain and protect systemic nations by expanding the fire power of the IMF.

We see the markets struggling still amid the high uncertainty over the outlook and with the never ending Greek drama. So far the progress is supporting the market and the final event will be a break or make for markets, the infamous jobs report from the United States.

Investors have been eyeing good macroeconomic data from the US economy which eased the woes of recession. The data today can have the support for crude’s rally to continue or reverse again south.

The market expects 95 thousand jobs gain and unemployment to linger at 9.1% and any better than expected data will have for sure a positive impact on the market while weak numbers on the contrary can erase the rally seen the past sessions, especially as we come to the end of the week and uncertainty is still governing the final call from the G20 which will surely come after markets close for the weekend today.

 

Republicans: We Don't Care About The Cain Scandal

A majority of likely Republican voters in a new ABC News/Washington Post poll say that the sexual harassment allegations against Herman Cain are 'not serious' and an even larger majority say it will make no difference in who they support for the GOP nomination.

 

The poll, conducted from Monday to Thursday, has Cain in a statistical tie with former Massachusetts Gov. Mitt Romney for the lead — with Romney at 24 percent and Cain at 23 percent.

Texas Gov. Rick Perry is a distant third, with 13 percent — in a statistical tie with former Speaker of the House Newt Gingrich, who is at 12 percent.

Fully 55 percent of likely GOP voters say the charges are 'not serious' — a number that increased throughout the week as no victims came forward, according to the poll. Just 23 percent say the scandal would make them less likely to vote for Cain, while 69 percent say it will have no difference.

The race for the nomination is still in flux, with 69 percent of GOP voters — and 71 percent of Romney backers and 66 percent of Cain supporters — saying there is a chance they will change their minds before the nomination.

The poll has a margin of error of ±5 percent.

Read the full poll results here >

 

These Are The Ten Most Powerful People In Europe Right Now