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| Customer Complaint Handling Initiatives and the Law | | | |
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.
Summary
Introduction
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
Where Can I Get More Help?
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