Customer Complaint Handling Initiatives and the Law
- Service & Complaints Guides
- A Practical Guide to Handling Consumer Complaints
- Best Practices in Handling Customer Complaints
- A Guide for Consumer Complaints Management
- 6 Steps to Achieve Customer Service Excellence
Although market-based Customer Complaint Management initiatives are not required by law, they nevertheless operate within a framework of law. The prospect of a disgruntled customer taking a firm to court, or complaining about that firm to a government customer protection agency, creates a strong incentive for businesses to meet the redress needs of customers from the outset and thus avoid potentially expensive and acrimonious legal actions and bad publicity.
From a customer standpoint, the courts represent an important avenue of final redress should other options prove insufficient, but the expense, time commitments and complexity of court processes tend to make judicial recourse impractical for small transactions.
Legal recourse is particularly difficult in cross border transactions, as it is often unclear which law applies, what is the most appropriate forum for recourse, and how enforcement of judgments will be handled. This is particularly the case in electronic commerce transactions, when the customer might be in one country and the merchant in another.
A troubling new development in the United States has been the inclusion in the terms of some customer contracts of a provision mandating usage of a particular form of redress, despite the fact that this pre-designated form of redress may not be convenient, appropriate or fair to the customer. These clauses are not in the best interests of customers, and have been very poorly received. For example, dissatisfied customers in the U.S. have generated negative publicity about firms engaging in this practice. For these reasons, use of such clauses has been roundly condemned by American customer organizations.
The perception that government may develop a regulation to deal with a problem when the private sector does not address it on its own can motivate firms to develop a non-regulatory redress response. The Canadian Motor Vehicle Arbitration Program, the comprehensive complaints management system of the Cable Television Standards Foundation, and the Alberta New Home Warranty Program are all examples of Customer Complaint Management initiatives that were developed in response to the prospect of government regulation.
The law also constrains use of Customer Complaint Management initiatives. A Customer Complaint Management initiative must not be used in an anti-competitive manner to decrease choice, price or access to the market. Similarly, federal, provincial and territorial deceptive marketing legislation acts as a safeguard that firms will meet their Customer Complaint Management commitments, because when they do not they may be making misleading or deceptive representations.
Courts can and have applied legal notions of fairness to Customer Complaint Management initiatives to protect industry members and customers. Industry associations must be careful to structure their Customer Complaint Management initiatives so that there is adequate notice to affected members of any proposed disciplinary actions, as well as an opportunity for meaningful response. Recent court decisions have confirmed the obligation of industry associations to be fair to members in such circumstances, or risk having their decisions overturned.
Depending on the jurisdiction, mediation and arbitration may also be subject to judicial review for procedural breaches and misapplication of the law. Binding arbitration is commonly used for high value commercial, labour and other disputes involving complicated issues. In order to bind parties, arbitration must meet legal standards of due process and fairness, and is subject to judicial review, as well as to domestic and international laws regarding enforceability. Requiring customers to waive their rights to judicial recourse as a precondition of arbitration may not be necessary in order to resolve the dispute, and is risky given the standards of fairness that must be met before such waivers are enforceable. This may also discourage participation by customers who have more trust in the public justice system, even if it is less efficient and convenient, and more expensive. When binding arbitration is used, it is essential that the customer’s agreement to be bound is fully informed and voluntary, and that the customer fully appreciates what he or she is giving up in exchange for arbitration.
- Market-based Customer Complaints Handling Initiatives
- Preventive Customer Complaint Handling Initiatives
- Internal Complaints Handling Initiatives
- External Private Dispute Resolution Initiatives
- Comprehensive Complaints Handling Systems
- Characteristics of Effective Online Trustmark Programs
- Online Redress
- The Need for Effective Customer Complaint Handling Initiatives
- Customer Complaint Handling Initiatives and the Law
- Developing and Implementing Complaint Handling Initiatives
- Elements of Successful Customer Complaint Handling Initiatives
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