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We were recently reminded that a company’s customer interface is, at times, part of the risk management process. Handled smartly and risk can be minimized; handled poorly and a class action lawsuit can result.

According to a class action lawsuit currently in federal court, a customer called customer service to complain of damage to his home caused, he claimed, by the use of the company’s product. The customer was seeking reimbursement of the $210 he paid a repairman. He had a bill and the repairman told him that the damage was caused by the use of the product. The customer service representative was very sympathetic and offered a $3 gift card, apparently the price of the product. No sale! Instead, the customer finds a lawyer and filed a class-action lawsuit against the retailer and manufacturer on behalf of everyone who has suffered similar damage as a result of the product’s use. What makes the matter worse is that lawyers were advertising about such problems at the time. Needless to say, both the retailer and the manufacturer probably paid their lawyers more than $210 just to read the complaint.

Do customers call with overstated complaints? Certainly, at times. Do people try to run scams on customer service representatives? Yes. But there are also legitimate complaints that need to be identified and quickly resolved in order to prevent them from evolving into something much larger. Limiting customer service representatives to a script and a pat response is not the way to handle such complaints. Rather, these complaints must be identified and escalated so that they get proper treatment. One possible method is to escalate any complaint where the customer claims to have suffered monetary damage or personal injury so that the complaint can be vetted.

This situation raises another question. How should a failure at the customer service level affect an indemnification agreement? We’ll provide some thoughts on that in another post.