Bad Service is Epidemic, Will the Government Fix it?

Last Updated Jul 22, 2011 11:10 AM EDT

What if the government told you that your company's service sucked and threatened to punish you if you didn't fix it?

That's already taking place in Spain, and now it's coming to the UK, too â€" specifically with phone and wireless companies.

The UK's Office of Communications, an independent regulatory agency, earlier this week released a report that concluded 1 in 5 in each of the fixed and broadband markets, and 1 in 10 in each of the mobile and pay TV markets were "dissatisfied" with the quality of customer service.

New UK rules go into effect today for dealing with customer grievances. Companies will have to resolve initial complaints within eight weeks, or disgruntled customers will be able to take them to either the communications ombudsman or to the UK's Communications and Internet Services Adjudication Scheme for arbitration.

In light of the disappointing batch of customer service data that's just been released in the US, and the fact that the Obama administration just created the Consumer Financial Protection Bureau, the question arises: Could the US government take a similarly tough approach on behalf of consumers?

Change brewing in the US
Here in the United States, the prevailing view has been that companies with bad service are punished by market forces. Which is to say, businesses that don't serve their customers will fail, because customers take their dollars elsewhere.

There's a growing realization, though, that the "market" fix can't be applied to every company. For instance, in an industry where the barriers to entry are relatively low and there are a lot of players, the market can bring its weight to bear on a company that disses its customers. But when barriers to entry are high and there's been a lot of consolidation, companies can afford to ignore their customers.

And they do.

Airlines, banks, cable companies and telecoms fall under that category. Don't believe me? Check out the ACSI numbers. They're embarrassing. These businesses are completely tone-deaf to their own customers because they can afford to be.

The US government to the rescue?

That's why laissez-faire free marketers are so riled up about the emergence of the Consumer Financial Protection Bureau, the first major agency launched in Washington in nearly a decade and the first since the early 1970s that is specifically focused on American consumers. It opened its doors earlier this week.

The agency will focus on banks and financial institutions, but critics are worried that it might someday extend its reach to other industries where market forces are unable to fix systemic service problems.

Their concerns are justified. It isn't inconceivable that the U.S. government will soon put other industries in its regulatory crosshairs.

Whole sectors of the American economy have built their empires on bad service and high prices, and enough is enough.

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Christopher Elliott is a consumer advocate, syndicated columnist and curator of the On Your Side wiki. He's the author of the upcoming book Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals, which critics have called it "eye-opening" and "inspiring." You can follow Elliott on Twitter, Facebook or his personal blog, Elliott.org or email him directly.
Photo: kalleboo/Flickr
  • Christopher Elliott

    Christopher Elliott is a consumer advocate and journalist. A columnist for National Geographic Traveler magazine and the Washington Post, Elliott also has a nationally syndicated column and blogs about customer service for the Mint.com. He is at work on a book about customer service issues.