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Managing Consumer Complaints:
Responsive Business Approaches To Consumer Needs
Sponsored by the U.S. DEPARTMENT OF COMMERCE Office of Consumer Affairs
Barbara Hackman Franklin Secretary
Revised October 1992
This report contains the recommendations of the project participants. It does not necessarily represent the policies or plans of the U.S. Department of Commerce or any other Federal Government agency.
TABLE OF CONTENTS
- PREFACE
- INTRODUCTION
- RECOMMENDATIONS FOR MANAGING CONSUMER COMPLAINTS
- Developing an Effective Strategy
- Management's Role in Establishing the Program
- Basic Steps for Effective Complaint Management
- Publicizing Your Complaint Management System
- Using Complaint Management to Reduce Causes of Complaint
- Resolving Complaints at the Point of Purchase
- Using Third-Party Dispute Resolution Mechanisms
- CONCLUSION
- APPENDIX A--Complaint Management Checklist
- APPENDIX B--Additional Sources of Information and Guidance
- APPENDIX C--Characteristics of Good Third-Party Complaint Resolution Mechanisms
This publication contains recommendations for responsible business practices in managing consumer complaints. Its objectives are to define and encourage exemplary standards of business conduct and to heighten business sensitivity to consumer needs and preferences, objectives that contribute to customer loyalty and good will.
While the recommendations are clearly applicable to the entire business community, they reflect a special effort to provide a service to small and medium-sized businesses.
The guide was developed under the sponsorship of the U.S. Department of Commerce's Office of Consumer Affairs. It was reviewed by the Federal Trade Commission (FTC), the agency charged with protecting the general public, consumers and businesses against anti-competitive behavior and unfair and deceptive business practices; and by members of the National Coalition for Consumer Education (NCCE). NCCE is a coalition of educators, government consumer officials, business consumer affairs professionals, and consumer group representatives whose common goal is to further consumer education efforts. This cooperative effort produced a publication which represents the perspective of consumers, business, educators, and government. Representatives spoke for themselves rather than for the organizations, agencies, or businesses with which they are affiliated.
This publication is one in a series of Consumer Affairs Guides for Business. It builds on publications issued in 1980-1984. The original reports were produced by the Society of Consumer Affairs Professionals in Business, an international professional organization of individuals with consumer affairs responsibilities in their respective companies, and by the National Association of Consumer Agency Administrators, which represents State and local consumer protection agencies.
This new edition updates the recommendations which are basic to an effective company complaint handling system. In an era of intense competition in international as well as domestic markets, customer satisfaction is the key to success. An effective mechanism for addressing complaints is essential to customer satisfaction, a major ingredient of a company's total quality process.
The Department of Commerce is grateful to the FTC, NCCE, and the individuals who contributed their time and expertise to review this report.
Patricia A. Faoro
Director of Consumer Affairs
Today's consumers seek more than price bargains--they want useful purchasing information, high quality, reliable and safe products, dependable servicing, and fair sales practices. Above all, they want to know that companies are trading in good faith. A company's failure to fulfill these expectations can breed dissatisfaction and antipathy, unless that business helps resolve resulting consumer complaints fairly and promptly.
In our global marketplace, where businesses compete both nationally and internationally, effective complaint management must be a priority for every business. The way a company reacts to complaints is a measure of its concern for the quality of its merchandise and services and of its desire for consumer satisfaction.
Markets are becoming more culturally diverse, more global in nature, and customers' expectations are changing. As the marketplace changes, staying close to the consumer is of increasing importance. Complaints are a critical form of communication between buyer and seller. They offer business an opportunity to correct immediate problems and they frequently provide constructive ideas for improving products, adapting marketing practices, upgrading servicing, or modifying promotional material and product information.
Government agencies encourage businesses to settle their own disputes directly and, if necessary, to make supplemental use of third-party complaint systems that often enlist the participation of business, consumers, and government. Then consumer protection agencies and the courts can devote their time and resources to responding to serious violations of law and problems solvable only by government action.
Recognizing the importance of responding fairly and efficiently to buyer disappointment in the marketplace, many businesses have established effective and innovative systems for resolving consumer complaints. However, not all companies have made effective complaint management a routine part of their business operations. Within any industry, those companies with a positive philosophy and reputation for fair complaint management have a competitive edge. Effective complaint management leads to increased customer satisfaction, which in turn, yields greater brand loyalty.
This publication discusses why it is in business' own interest to give a high priority to effective complaint management. It recommends practical procedures for reviewing and resolving consumer complaints and for using them as management and marketing tools.
The first six recommendations address in-house complaint management systems. They focus on important elements such as management commitment, style, staffing, procedures, and recordkeeping. Recommendation 7 encourages businesses to use third-party dispute resolution systems to supplement company complaint programs. It identifies procedural safeguards that help insure fair dispute resolution. The publication concludes with a complaint management checklist to help businesses evaluate and refine their own complaint management strategies.
Recommendations For Managing Consumer Complaints
RECOMMENDATION 1
Every company, regardless of its size or the price of its products, needs an effective strategy for managing consumer complaints and inquiries.
Effective complaint management enhances a company's reputation, builds consumer confidence and loyalty, and attracts new customers.
By talking back when they believe they have not received their money's worth, consumers give business an opportunity to correct the immediate problem and restore good will. Experience shows that consumers who complain about products and services continue to shop with the businesses and buy the products they complain about--if they believe the complaint was resolved fairly.
Conversely, consumers who do not complain directly to business may simply withdraw their patronage and criticize the company or the product to others. Research into complaint behavior reveals that only a fraction of dissatisfied consumers complains to business and thereby gives the company an opportunity to correct the problem. There is evidence that some consumers do not complain because they are skeptical about business' willingness or ability to resolve disputes fairly. Others don't report problems because they don't know where or how to complain, or they don't believe it is worth the inconvenience.
Such findings underscore the importance to business of a complaint management system that is well publicized and easily accessible. An unregistered complaint may do as much harm as one that is mismanaged or unresolved.
Effective complaint management can result in increased sales, better products, improved personnel performance, and business economies.
Complaints are an inexpensive source of market research. When properly compiled, complaint data can indicate how consumers interpret company advertising, how products and services meet (or do not meet) consumer expectations, how instruction manuals and other consumer information can be improved, and how products can be designed better.
Complaints may signal a need for better systems of quality control at the production level. They may tell management of improvements that can be made in training and supervision of sales and service personnel.
Careful complaint management can save business unwanted costs. For example, negative word-of-mouth publicity from dissatisfied consumers means lost revenue and necessitates additional investment in advertising to attract replacement customers. Also, careful complaint analysis may reveal product defects that could lead to expensive recalls, if uncorrected. The possibility of costly lawsuits over warranty performance or product liability provides an additional financial incentive to use complaints as one means of identifying problems early.
Finally, it is to business' advantage to settle complaints promptly and equitably when they are first brought to the attention of business. It is more costly to resolve complaints that have been taken to outside parties, such as State or Federal agencies, or the courts.
Effective complaint management strategies can involve the use of tollfree numbers.
Increasingly, companies are finding that toll-free numbers are an effective tool for achieving the goals listed above. Toll-free numbers give consumers an uncomplicated, immediate, personal, and free means of resolving problems or getting answers to questions. Barriers which might otherwise prevent consumers from complaining are overcome. In short, toll-free numbers can mean increased customer satisfaction.
Because toll-free numbers make company services so accessible, more consumers are likely to contact those businesses that use them for customer relations. Increased contact by phone can yield more detailed marketing information, including the identification of the causes of problems and ideas for new products.
While establishing toll-free numbers involves costs to a business, the ability to respond immediately to consumer complaints and inquiries may reduce expenses and increase profits in the long run. Such direct customer contact provides business with opportunities for consumer education to prevent problems from escalating or occurring in the future. It also enables business to introduce other products to consumers, thereby increasing sales.
Effective complaint management helps business meet its responsibility to cooperate with Federal and State regulatory agencies.
When business solves easily-remedied problems with individual consumers, it reduces the possibility of government intervention into routine buyer/seller relations and allows public agencies to devote their limited resources to correcting violations of law. In cases where business has an obligation to report problems to the government, effective complaint management procedures are critical. For example, the Consumer Product Safety Act requires business to report promptly to the Consumer Product Safety Commission when it learns of safety defects in consumer products. (See companion guide, CONSUMER PRODUCT SAFETY.) Also, consumer complaints may contain evidence of fraud, which both consumers and business have a duty to report to law enforcement officials.
It is a good policy for business to work with consumer protection officials at the State and Federal levels to remedy complaints and correct any patterns of unfair business practice that become apparent through complaint trends. Most Federal agencies do not have authority to remedy individual consumer complaints, although many can enact regulations to control industry-wide problems and can bring enforcement actions against companies whose conduct violates consumer protection laws.
At the State level, however, statutes generally assign responsibility for complaint investigation to particular State agencies--usually the Office of Consumer Protection, or Department of Consumer Affairs. It is advisable for consumer relations personnel within business organizations to have good working relationships with their counterparts in consumer protection agencies.
RECOMMENDATION 2
Company management should establish the capacity, policies, and procedures necessary to provide effective complaint review and resolution.
Management attitudes are reflected in the conduct of employees and the performance of the company. Top level commitment to effective complaint management establishes the motive and incentives for all personnel to strive for consumer satisfaction.
Because every employee has responsibility for satisfying customers, all staff must be well trained and empowered to quickly and fairly resolve complaints and handle inquiries. Although companies have reason to locate the consumer relations and complaint management functions centrally within the organization, each interaction the consumer has with an employee of the business is an opportunity to build customer loyalty through effective complaint management.
Management's responsibility begins with the preparation of written policies and procedures for speedy and fair complaint resolution. The complaint management strategy and company policy on refunds, exchanges, and repairs will vary, of course, depending on the nature of the product or service, the terms of purchase, and other factors.
These policies and procedures should be put in writing and communicated to all departments, with emphasis on the accountability of individual employees for courteous and fair resolution of complaints. Guidelines should clearly state cases where front-line employees are empowered to resolve complaints on the spot. If clear lines of authority are established by management, consumer problems should be solved effectively. In addition, when employees understand management's philosophy and their own responsibility for putting it into effect, they can save consumers the frustration of repeatedly filing the same complaint or having to turn to outside agencies for assistance.
Management should regularly review and, when necessary, find ways to improve complaint management procedures. Particular attention should be given to refining communication and coordination between complaint management and operating departments. Periodic surveys of consumers will reveal whether they feel they have been well served by the complaint processing procedures, and whether they find the company's policies on refunds, repairs, exchanges, and other forms of redress to be fair.
Short- and long-range planning should include adequate budget and staff allocations for consumer service and complaint management. The administrative costs of complaint management should be borne by business, not by the individual consumers who register the complaints. Retailers and manufacturers may want to agree on a formula for sharing costs of complaint resolution.
Sometimes costs are associated with providing a remedy. By law, products under full warranty must be repaired or replaced at no cost to the consumer, even if this involves transportation and reinstallation. (See companion publication on PRODUCT WARRANTIES & SERVICING for additional guidance.) Company policy toward returns of products not under full warranty should avoid placing unreasonable costs or burdens upon consumers. For example, it may be reasonable to ask customers to pay the postage to mail small items back to the manufacturer for repairs, but it would be unreasonable to require customers to transport heavy or cumbersome items. To minimize cost and inconvenience, manufacturers might arrange to have retailers accept returns and make exchanges for which they are reimbursed by the manufacturer.
Company management should closely supervise complaint review and resolution. In small companies, owners and managers can be personally involved in consumer relations on a regular basis. In larger companies, reporting and review procedures enable management to monitor the operation of the complaint management system and to stay in touch with consumer response to products and services.
While all employees must be responsive to consumer complaints and inquiries, day-to-day responsibility for complaint processing and resolution should be assigned to individuals who are both accessible to consumers and able to follow complaints through to final resolution. All staff should be prepared to receive and, if possible, resolve consumer complaints regardless of their primary position in the company. When complaint management is centered in a specific area of the organization, all employees should quickly follow through to see that consumer complaints are correctly referred and handled. Independent authority for complaint management avoids possible conflicts within the company. Employees whose primary responsibility is sales or servicing, for example, may have difficulty resolving complaints objectively if they feel their performance rating could be adversely affected.
Staff should be selected carefully for this sensitive consumer relations function. Consumers with complaints can be upset or angry. Therefore, employees need to be patient, articulate, and able to balance fairly the interests of the company and those of the consumer. They also should be able to communicate legitimate consumer complaints to management with the objective of helping to determine if changes in company policies or procedures are needed.
All staff should be familiar with the operations of the company and with its products and services. Training can strengthen interviewing and communications skills and heighten the staff's awareness of special needs of consumers from different cultural, economic, or educational backgrounds. Also, complaint management staff should be familiar with consumer protection laws and with the operations of third-party dispute resolution mechanisms to which particularly difficult complaints may need to be referred.
Finally, customer relations personnel should have professional status, adequate salaries, and opportunities for advancement consistent with the importance management assigns to consumer satisfaction.
Key Ingredients In Effective Consumer Complaint Management
- Management commitment
- Fair policies on repairs, replacements, and refunds
- Publicity for the system
- Accessibility of complaint management staff
- Promptness and courtesy of response
- Personalized response, whenever possible
- Simple, clear communications with consumers
- Objectivity and flexibility in determining the proper resolution
- Uniform and consistent recordkeeping
- No charge to consumers for filing complaints
- Minimal cost, if any, for obtaining redress
RECOMMENDATION 3
The basic steps of the complaint management strategy can be adapted to the resources and needs of individual businesses.
Basic principles of sound complaint management apply regardless of com- pany type or size. (See Appendix A for Complaint Management Checklist.) Actual operating procedures can be adapted to the needs and resources of a particular company. (See Appendix B for additional sources of guidance.) The system need not be costly or elaborate, so long as the essential functions are performed efficiently, courteously, and fairly.
BASIC STEPS FOR EFFECTIVE COMPLAINT MANAGEMENT:
Designate Location(s) to Receive Complaints Consumers need to know where and how to file complaints or make inquiries. Therefore:
- Select places and means (such as a toll-free number) to receive complaints that are visible and accessible to consumers.
- Publicize the complaint system to encourage consumers to voice their dissatisfactions and to make apparent the good intentions of the company.
Develop a System for Recordkeeping
Computerization can streamline the complaint management process, de- creasing response times for consumers, eliminating the need for extensive paper files, and speeding report generation and analyses for top management.
- Develop computerized or paper forms for recording, categorizing, and filing complaint records.
- Design the system and/or use software to perform functions including:
- communicating complaint data and analyses to top management;
- permitting swift identification and response when complaints should be reported to other departments or companies in the distribution network, or to law enforcement or regulatory agencies;
- providing market research through complaint trends;
- enabling management to monitor the efficiency and effectiveness of the complaint management system.
Process and Record Complaints
- Log in the complaint and relevant data.
- Categorize it for resolution and recordkeeping. Categories must be clearly defined and exclusive of one another.
- Assign the complaint to one person for handling.
- Forward the complaint to another level of authority, only when necessary.
Acknowledge Complaint
Consumers do not register complaints with only a casual interest in their disposition. Complaining involves some inconvenience and, possibly, ex- pense. Loyal customers with strong feelings are often involved. Therefore:
- Talk directly to the customer by phone or in person whenever possible.
- Use mailgrams or letters when necessary, but avoid impersonal form letters.
- Take extra time, if needed, to help consumers with special needs, such as language barriers or disabilities.
Investigate and Analyze the Complaint
- Be fair.
- Get both sides of the story.
- Keep records of all meetings, conversations, or findings in the complaint database or file.
Resolve the Problem in a Manner Consistent with Established Goals for Customer Satisfaction
- Empower front-line employees to authorize satisfactory solutions to problems.
- Forward the complaint to another level of authority for resolution only when absolutely necessary.
- Act swiftly, keeping the consumer informed through progress reports.
- Notify the consumer promptly of a proposed settlement..
Follow Up
- Find out if the consumer is satisfied with the resolution. Was it carried out?
- Refer the complaint to a third-party dispute resolution mechanism, if necessary.
- Cooperate with the third-party mechanism.
Prepare and File a Report on the Disposition of the Complaint; Periodically Analyze and Summarize Complaints
- Circulate complaint statistics and action proposals to appropriate departments.
- Develop an action plan for complaint prevention.
- Make sure the consumer viewpoint is given appropriate consideration in company decision-making.
RECOMMENDATION 4
Complaint management systems should be publicized and explained to employees, consumers, and the public.
A complaint management system must be visible and accessible in order to serve consumers and accomplish company goals. Management, sales, service and public relations personnel should all cooperate to make the complaint system accessible to consumers. There are many ways to publicize the system, including:
- On posters and signs in the sales and service area. On contract forms and sales slips.
- In charge account mailings.
- In use and care manuals.
- In advertising--your company's complaint system could be the theme of an advertising campaign.
- On product packaging and labeling, or on products themselves, if feasible.
- Through consumer information programs such as videotapes, booklets, and educational activities.
Instructing consumers of their responsibilities can help avoid misunderstandings and unnecessary complaints. Educating and informing consumers establishes realistic expectations and increases customer satisfaction. Include advice in the material that advertises your complaint system and have sales and service personnel encourage consumers to:
- Carefully read promotional material and product literature before buying.
- Follow instructions in use and care manuals.
- Understand the terms of sale (warranties and guarantees, contracts, credit terms, refund policies, and so on).
RECOMMENDATION 5
Effective complaint management should serve to reduce the causes for consumer complaints.
Complaints and complaint trends tell business how to do its job better by alerting management to problems which need prompt attention and correction. Furthermore, they indicate long-range opportunities for product innovation and problem prevention. A well-planned system for screening and recording complaint data can provide answers to such important questions as:
- Are products "over-sold" or "over-advertised"? Is advertising clearly understood?
- Are salespeople overzealous?
- Do product disclosures (such as labeling, warranty information, and service agreements) need to be improved?
- Are user's manuals clear, complete, and easy-to-read?
- Would alterations in warranty coverage reduce complaints?
Complaints also provide information about product quality:
- Are there opportunities for product improvements or better quality control?
- Are there indications of safety defects that should be reported and corrected, or that justify a recall?
To get this valuable feedback, complaint reporting must generate information swiftly and systematically to the appropriate manager or departments. Initial screening should trigger immediate action, when necessary, and statistical summaries should identify trends and long-range courses of action.
RECOMMENDATION 6
Complaints should be resolved by the retailer. If that proves difficult or impossible, the manufacturer should aid in the resolution.
Direct, swift, and informal complaint resolution is advantageous to all concerned--consumers, business, government, and the courts. Consumers are likely to turn first to the place of purchase--retail store, service establishment, contractor, and so on. Resolving complaints at this level avoids unnecessary consumer frustration and preserves the direct buyer/seller relationship. Moreover, it is likely to be relatively easy, quick, and economical.
Still, it is important that companies coordinate complaint management with others in their distribution network. Retailers, manufacturers, and service outlets mutually benefit from keeping one another informed of complaints and complaint trends and cooperating when necessary to see that complaints are fully and satisfactorily resolved.
Some laws (warranty and product safety laws, for example) assign overlapping responsibilities to all businesses in the distribution chain for disclosing information to consumers and for identifying and correcting problems associated with products and services. Also, government regulatory agencies may step in if businesses themselves do not correct problems that result in recurring patterns of complaints.
Manufacturers should encourage consumers and retailers to contact them when a dispute cannot be resolved at the place of purchase. Complaint systems at the retail level should be structured to isolate those matters which need the immediate attention of manufacturers. These include complaints which suggest possible design or production defects that affect product safety and performance. Also, complaints forwarded from the retail level can help manufacturers evaluate their own policies toward warranty coverage, for example, or identify advertising or labeling which needs to be clarified, or learn things about product performance or marketing that are revealed only after wide distribution.
RECOMMENDATION 7
Businesses should use third-party dispute resolution mechanisms to supplement in-house complaint management.
If complaints cannot be resolved directly between the consumer and retailer or manufacturer, they should be referred to third-party dispute resolution. Third-party mechanisms use the services of unbiased individuals to resolve disputes through conciliation, mediation, and/or arbitration.
Conciliation: A neutral conciliator brings the parties together and encourages them to find a mutually acceptable resolution of the dispute.
Mediation: A neutral mediator becomes actively involved in negotiations between the parties. The mediator can propose a resolution, but cannot dictate a settlement of the dispute.
Arbitration: An independent individual or panel hears the facts on both sides of a dispute and reaches a decision by which both parties have previously agreed to abide. In some systems, only the business agrees in advance to abide by the outcome of the arbitration.
Third-party dispute resolution is advantageous to business because it enables expeditious, economical, and fair complaint resolution without government regulation or legal action. In fact, government agencies encourage the use of third-party mechanisms when complaints cannot be resolved directly between buyer and seller. Proponents of third-party systems point out that their use can help make manufacturers and retailers more responsive to consumer problems. By submitting disputes to a neutral decision-maker, business can demonstrate its good will in the form of a willingness to seek unbiased solutions to consumer complaints.
The number of third-party dispute mechanisms has grown. For some time, government offices of consumer protection in many jurisdictions have used mediation to settle disputes between business and consumers. The Better Business Bureau was one of the pioneers in the use of arbitration to settle consumer disputes. Better Business Bureaus in all metropolitan areas now offer this service. Arbitration has been written into several consent agreements between the Federal Trade Commission and businesses subject to frequent consumer complaints.
Because their value has been proven, third-party dispute resolution programs have been established by trade associations and some individual companies to resolve complaints involving a particular industry or product brand.* Also, some State legislatures have established arbitration procedures for certain types of disputes, such as medical malpractice or automobile lemon law complaints.
*(One of oldest privately-sponsored third-party programs is the Major Appliance Consumer Action Panel (MACAP), organized in 1969. Dispute resolution programs now exist in several industries, including automobile, funeral services, and home construction. Some corporations, including major auto manufacturers, sponsor their own third-party complaint systems).
Accumulated experience has enabled the government and business organizations to refine the procedures followed by third-party mechanisms to better insure due process and settlements that are fair to both parties. Businesses considering the use of a third-party system should evaluate it against criteria and standards developed by the government and the more advanced privately-sponsored mechanisms. (See Appendix B for a list of organizations that can provide additional information and guidance.)
The Magnuson-Moss Warranty Act has a section which requires that informal dispute settlement procedures which are voluntarily incorporated into the terms of a written warranty must comply with the Federal Trade Commission's (FTC) Rule on Informal Dispute Settlement Procedures (16 C.F.R. 703). The FTC will advise businesses on selecting in-house and third-party complaint resolution procedures. (See Appendix C for more detail on the essential attributes of effective and fair third-party complaint resolution mechanisms.) In addition, the FTC has recently published a booklet, Road to Resolution: Settling Consumer Disputes, which provides consumers with detailed information on the types of dispute resolution programs that are available, and how to use them.
A small percentage of consumers and businesses seek more formal thirdparty complaint resolution in small claims court. Use of the courts can be cumbersome and costly for both sides and usually can be avoided if a good faith effort is made to resolve disputes at the company level or through informal dispute resolution.
Many State and local offices of consumer protection have the power to enter into litigation on behalf of consumers. In addition to the cost, the adverse publicity associated with being sued by a consumer protection agency is a powerful incentive to business to use efficient, informal complaint management and to study complaint trends to be sure that company practices are well within the boundaries defined by consumer protection laws.
Complaint management systems and company policies on refunds, exchanges, and product servicing vary widely depending on the nature of the product or service, the terms of purchase, consumer use patterns, and so on. There is no single formula that will provide universal relief for dissatisfied consumers. However, industry and government experience with complaint management has shown that the procedures and safeguards recommended here provide a sound basis for an efficient and fair complaint program.
The commitment and continuing involvement of company management is critical to successful complaint resolution and to the optimum use of complaints as a management tool. Management involvement and review will help discover new ways to improve both the complaint management system and the fairness of remedies offered to consumers.
Complaint Management Checklist
In planning a system for complaint management or evaluating the one you have in place, consider the following questions:
- Does your company view consumer satisfaction as a key ingredient of total quality management?
- Do you have a systematic strategy for complaint management?
- Do you have written procedures for your complaint management system?
- Is staff throughout the company well aware of the procedures and the importance of your complaint management system?
- Does top management directly oversee your complaint handling procedures?
- Do incentives exist to reinforce staff commitment to consumer satisfaction?
- Is your complaint system easily accessible to consumers?
- Is your complaint system computerized?
- Have you considered a toll-free number for complaints and inquiries?
- Do you publicize your complaint system to consumers? If yes, how? Printed media (posters, advertising, monthly statements, on packaging, labeling, and products)?
- Communications by sales personnel?
- Is your complaint system:
- decentralized, with each employee, branch office, or store responsible for resolving complaints?
- centralized in one department or location?
- or a combination of both, with larger or more serious complaints resolved in a central office?
- Are you providing adequate training for your complaint management staff?
- Does the customer relations staff feel they have equal stature with other professionals in the company?
- Do you periodically survey your customers to see if they are satisfied with your complaint management system? Do you encourage feedback?
- Do you regularly review your complaint management system and make necessary improvements?
- Do you utilize your system of complaint management for more than settling individual complaints? For example, for quality control and problem prevention?
- Does your complaint system swiftly generate systematic information about causes of complaints and complaint trends? Does this data meet your management needs?
- Do you circulate to top management periodic reports of data from complaint records with suggestions for action to prevent recurring problems?
- Can you identify areas in the company where your complaint management system is having an effect? Has it been positive or negative?
- Do you coordinate your complaint management system with others in the distribution chain for your products or services? Do you have a direct line of communication with them?
- Do you have an adequate understanding of how these external organizations are affecting your relationship with customers?
- Do you work cooperatively with governmental consumer agencies?
- Do you use third-party dispute settlement mechanisms for those problems not resolved in-house?
- Has the use of third-party or in-house mechanisms had any effect on the number of regulatory actions (both private and governmental) involving your company?
Additional Sources of Guidance and Assistance
For help in developing your company's complaint management procedures and information about third-party systems, contact your industry trade association You may also contact:
Council of Better Business Bureaus
4200 Wilson Boulevard, Suite 800
Arlington, VA 22203
(703) 276-0100
American Arbitration Association
140 West 51st Street
New York, NY 10020-1203
(212) 484-4000
Federal Trade Commission
Division of Marketing Practices
Washington, DC 20580
(202) 326-3128
Society of Consumer Affairs Professionals in Business
801 North Fairfax Street, Suite 404
Alexandria, VA 22314
(703) 519-3700
National Association of Consumer Agency Administrators
1010 Vermont Avenue, N.W., Suite 514
Washington, DC 20005
(202) 347-7395
National Coalition for Consumer Education
434 Main Street, Suite 201
Chatham, NJ 07928
(201) 635-1916
National Institute for Dispute Resolution
1901 L Street, N.W., Suite 600
Washington, DC 22204
(202) 466-4764
Characteristics of Third-Party Complaint Resolution Mechanisms
Availability and Convenience:
- Written information about how to contact the system and how it works;
- Access to the system as soon as a reasonable attempt has been made to settle the dispute directly;
- Convenient hours of operation.
Fair Procedures:
- Meetings open to the public or to public officials;
- Sufficient financing so there is no cost (or minimal cost) to the consumer;
- Agreement in advance about who will be bound by the decision;
- Guidelines to insure the impartiality of staff and decision-makers and thereby inspire consumer confidence;
- Rules to insure the fairness of investigations;
- Opportunities for oral or written presentations by the parties;
- Reasonable timetables for decision-making;
- Annual independent audits of complaint management records or public access to records;
- Periodic independent audits and self-evaluation of the system;
- Disclosure to the disputing parties of additional avenues of redress, including small claims court.
Follow-through:
- Verification that the agreed-upon resolution has been carried out;
- Identification and reporting of complaint patterns to affected businesses for voluntary corrective action and, if necessary, to government agencies for investigation.
Either public scrutiny or access by public officials is essential to insure the system is working as it should. Independent audits are absolutely necessary when public access is limited in any way. Even the very best written rules have little meaning unless they are conscientiously and consistently followed. There have been instances in which State law enforcement officials have had to intervene to make sure third-party systems properly follow their own procedures.
Additional information about third-party complaint resolution is available from the Division of Marketing Practices at the Federal Trade Commission. Copies of the FTC publication The Road to Resolution: Settling Consumer Disputes are available from the Office of Public Reference at the Commission.
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