Consumer Complaints & Social Media

Whoever first coined the phrase “There’s no such thing as bad publicity” undoubtedly uttered this famous quote long before the age of social media. Customers who felt slighted or cheated in the past had few options, beyond shouting into the void. They could tell their friends, perhaps complain to their local news team, but odds were very very low that a company’s egregious error or mistreatment of a consumer would ever ultimately lead to bad press that was harmful to its bottom line. However, in today’s internet climate, illegal, deceptive, or even thoughtless decisions by a service provider can potentially lead to widespread vitriol across the internet and lead to millions of dollars in lost profit, federal regulatory investigations, or both.

One option for both past - and present - consumers to voice their business-related complaints has been the Better Business Bureau (BBB). Founded in 1912, the BBB is a non-profit organization that collates consumer grievances for hundreds of thousands of companies across America and grades them on an A-F scale for customer satisfaction and trustworthiness. While nationally known and effective in giving potential customers a rundown of how particular companies treat their consumer base and respond to issues, the BBB has no actual authority and is purely a source of company information and ‘reviews’. An agency with far more regulatory teeth, the Consumer Financial Protection Bureau (CFPB) is a government agency that also accepts customer-provided complaints about businesses. Unlike the BBB, the CFPB does have the authority to launch investigations of businesses that are suspected of engaging in illegal or deceptive practices and can also levy harsh penalties if said businesses are found to be disobeying industry regulations.

“So what does this have to do with social media?”, you may ask. Simply put, many companies have traditionally harbored the attitude that it isn’t necessary to always right a wrong for a single customer because it won’t have enough negative impact to affect their company as a whole. Addressing individual grievances may be too time consuming and/or expensive to be worth keeping one customer satisfied. But in the age of social media, a public complaint by a frustrated consumer can blossom into a firestorm of outrage. Beyond brand reputation fears, some states require lenders to keep record of consumer complaints, in all mediums, for years depending on the jurisdiction.

Additionally, many consumer complaints begin through social media channels and are often escalated by the consumer to the BBB or CFPB if the company doesn’t promptly respond. For example, musician Dave Carroll’s guitar was destroyed due to United Airline baggage handlers’ lax treatment during a flight in 2008. Carroll spent months attempting to claim compensation through the customary complaint channels and made no headway. That is, until he created a music video about United’s dismissive attitude and posted it on social media. The video immediately found widespread attention and was viewed over a million times within 3 days. Thousands of viewers spread it across the internet and shared their own frustrations with the airline. United’s stock nosedived, with many industry experts agreeing that it was due to Carroll’s music video. One frustrated and mistreated consumer had singlehandedly cost an international company millions.

The above is an example of a public relations nightmare for United, who would have been far better off by agreeing that their baggage handlers were at fault and compensating Mr. Carroll for a new guitar than by ignoring him and hoping to “ride out” a complaint by a lone customer. A couple decades ago, bad service might lead to the loss of a customer or two. Today, it can potentially lead to a staggering financial blow and a PR disaster for the ages.