By Meghan Stoppel - a member at Cozen O'Connor. She was previously chief of the Consumer Protection Division in the Office of the Nebraska Attorney General.
As we gear up for a busy holiday season, it’s important for the industry that all exhibitors proactively manage customer complaints to help avoid formal complaints to consumer agencies and watchdog groups.
In fact, every complaint that is properly analyzed and resolved before drawing the attention of a regulator is an invaluable gift — offering businesses the opportunity to identify, tackle and resolve budding challenges before those challenges escalate into larger issues.
While consumer complaints might initially seem troubling to a company, they offer the opportunity to proactively address issues, overcome larger obstacles and preclude potential scrutiny from regulatory bodies like the state attorney general, who are entrusted with protecting consumers at the state level.
Typically, consumers first voice their concerns directly with a company. However, it is imperative for businesses to keep an ear to the ground for this feedback throughout their organizations and across all communication channels, including social media.
And, of course, all of this is in addition to monitoring complaints received from agencies like the state attorney general, the Consumer Financial Protection Bureau, and nongovernmental watchdogs like the Better Business Bureau.
These organizations often provide companies with valuable early warnings by mediating consumer complaints before initiating a formal investigation or issuing a civil investigative demand or subpoena. Businesses can and should use these complaints to their advantage.
Proactively Addressing Consumer Feedback
Oftentimes, this criticism manifests itself in the form of consumer complaints. Companies should take care to comprehensively analyze their complaint data. For instance, recurring complaints about unclear, online subscription sign-ups might mean that disclosures during registration are unclear.
Such feedback can, and should, prompt businesses to carefully review their enrollment practices and to consider whether those practices align with standards published by state and federal consumer protection agencies, such as the FTC's ".com Disclosures" guidance. For a copy of the “.com Disclosures” guide, click here.
Should the company ever fall under the state’s attorney general scrutiny, being able to point to concrete examples of the company monitoring its practices and taking steps to resolve any identified issues can go a long way in fostering goodwill and staving off potential litigation.
Companies should also note that while recurring trends identified in multiple complaints can trigger attorney general scrutiny, just one complaint can be enough to signal a broader issue.
Attorneys general often operate under the assumption that for every complaint reaching them, others might have been directed to the company first. Therefore, one grievance filed with a state attorney general may mean multiple consumers have been affected by the exact same issue. Moreover, a single, particularly severe complaint can sometimes be enough to instigate a formal investigation.
It is therefore critical that companies ensure they handle complaints with diligence, consistency and transparency, irrespective of the complaint's origin. Reactivity can be a pitfall. Waiting for issues to escalate before addressing them can be a recipe for heightened regulatory scrutiny.
As such, businesses should actively investigate and resolve every complaint they receive before they land on the radar of a state attorney general or any other regulator.
Looking Forward
In today's business environment, understanding and valuing consumer feedback isn't just good practice; it's essential for sustaining success.
Companies that view complaints as opportunities are better positioned for growth and innovation and to preemptively address matters before they attract regulatory scrutiny.
