It appeared to be a remarkable breakthrough: A company called UCSA Dealers Group was offering a product called the Hydro Assist Fuel Cell, which promised to boost a car’s mileage by at least 50 percent, turning any vehicle into a hybrid. The company made millions selling the kits, at about $1,000 a piece, to unsuspecting motorists.
In fact, they were all being cheated, according to the Federal Trade Commission, which last month reached a settlement with the company to stop what it calls the “phony” claims of UCSA.
Businesses cheat their customers in big and small ways, and their actions almost never result in an FTC enforcement action. Instead, their dishonesty translates to disappointed customers who only received half a product, a product that didn’t work as expected, or didn’t work at all, as the Hydro Assist kits are alleged to have failed to function.
I’ve been intrigued with how companies cheat – and how customers let them – since my book on Scams was published last month. Corporate cheaters don’t defraud customers so much as they cut corners, shortchanging them in an effort to create what they euphemistically call “shareholder value.”
I’m only beginning to research this fascinating topic, but it’s already clear that cheaters have a few things in common:
They use words like “new” and “improved” to cover their tracks.
Frequent product “improvements” can be a sign that the company is swapping out components or ingredients with others that are less expensive, which is one of the most common kind of cheats. For example, pet food companies often “upgrade” their products by changing the type of grain used, switching from an expensive one to a cheaper variety. Alas, the only thing being upgraded is the price, but your dog will never complain.
They’re constantly explaining themselves.
Ethically-challenged businesses are always on the defensive, explaining their hostile customer policies and practices to an increasingly skeptical public. One of my favorite examples is from the airline industry, which several years ago started charging economy-class passengers for the first checked bag (only a few domestic carriers resisted the trend). The airline industry used its rhetorical skills to paint its move as giving customers “what they want” and insisting the changes represented a significant improvement. In fact, the changes were strictly for their own bottom line. If a company is doing a lot of explaining, chances are, it’s doing a lot of cheating, too.
They leave a trail of very unhappy customers.
Cheatin’ companies have to contend with cheated customers, and they spend a fortune on reputation management and search engine optimization to quell the torrent of anger welling up from the Internet, but it’s often impossible to cover up. Do a keyword search for the company and include the term “scam” and you’ll find all of the complaints about shoddy products and substandard service. And yes, those are the ones you want to avoid.
They’re at the bottom of every customer-service list.
Most consumer reporters pay attention to the winners of lists like those compiled by the American Customer Satisfaction Index, and with good reason. Everyone likes a winner, but there are bottom-feeding businesses – and industries – that deserve equal attention. You can probably guess who they are. If you’re worried about being cheated, look for the companies with low scores, especially those with historically low scores, and steer clear of them.
They suffer from high turnover and low employee morale.
It’s hard to know if the company you’re doing business with has unhappy workers who have been sending their resumes out since the first day they were hired, but you don’t have to be a human resources pro or a psychologist to see the signs. Employees who are asked to cheat their customers are inevitably unhappy, and it shows (they’re rude, unhelpful and they make products that suck). If you feel taken for granted or victimized by these workers, things may be much worse – you’ve probably also been cheated.
Sadly, cheating companies can continue operating and they can even turn an occasional profit.
Why? Because they have help from customers like you. More on that next week.