While Comcast has received the most press this year for its legendary, but perhaps improving, customer service -- the company did not even make Consumer Reports fifth annual "Naughty & Nice" list. Rather than ranking companies with the worst overall customer service, the list focuses on specific, awful customer service policies.
The companies named by the magazine may, on an overall basis, be customer friendly, but each has an egregious anti-consumer practice that wins it a place on the list. In the past, companies including Amazon and Southwest Airlines have recovered from appearing on the naughty list one year to make the nice one on the next. So while appearing on the list is not necessarily an indictment of the overall company, it is a sign that something disturbing is happening.
Is AT&T being misleading about unlimited data?
It wouldn't be possible for a list celebrating lousy customer service to not include one of the major wireless companies, and AT&T (NYSE:T) makes this one because its leadership seems to not quite understand what the word "unlimited" means. The wireless provider was sued by the Federal Trade Commission for advertising unlimited data but not making it clear to customers that after they a use a certain amount of data, their speeds would be throttled, sometimes by as much as 90%, the complaint alleges. These slowdowns make "many common mobile phone applications -- like web browsing, GPS navigation, and watching streaming video -- become difficult or nearly impossible to use," according to the FTC.
"AT&T promised its customers 'unlimited' data, and in many instances, it has failed to deliver on that promise," said FTC Chairwoman Edith Ramirez. "The issue here is simple: 'unlimited' means unlimited."
According to the FTC, AT&T's marketing materials emphasized that an "unlimited" amount of data would be available to people who signed up for its unlimited plans, and that even when customers renewed their contracts, the company still neglected to inform them of the throttling program. If the throttling then led to people cancelling their contracts, AT&T added insult to injury by charging them early termination fees.
AT&T is fighting the FTC's charges and released a statement saying, "The FTC's allegations are baseless," and that the way the company operates "is fully transparent and consistent with the law and our contracts."
Is Marriott blocking Wi-Fi?
While AT&T disputes the reason it landed on the Consumer Reports list, Marriott (NASDAQ:MAR) reached a $600,000 settlement with the Federal Communications Commission over charges that it had disabled Wi-Fi networks established by consumers in the conference facilities of the Gaylord Opryland Hotel and Convention Center in Nashville, Tennessee -- a violation of Section 333 of the Communications Act.
According to an FCC Enforcement Bureau investigation, "Marriott employees had used containment features of a Wi-Fi monitoring system at the Gaylord Opryland to prevent individuals from connecting to the Internet via their own personal Wi-Fi networks, while at the same time charging consumers, small businesses, and exhibitors as much as $1,000 per device to access Marriott's Wi-Fi network," the FCC wrote in a press release about the settlement.
Enforcement Bureau Chief Travis Leblanc said: "It is unacceptable for any hotel to intentionally disable personal hotspots while also charging consumers and small businesses high fees to use the hotel's own Wi-Fi network. This practice puts consumers in the untenable position of either paying twice for the same service or forgoing Internet access altogether."
Per the settlement agreement along with the fine, Marriott agreed to stop the practice, institute a compliance plan, and file compliance and usage reports with the Enforcement Bureau quarterly for three years.
No returns on big TVs at Overstock?
While Marriott and AT&T fell on the wrong side of federal regulators, Overstock.com (NASDAQ:OSTK) got put on the list for a legal -- but decidedly customer unfriendly -- practice. The company, at the time the Consumer Reports story was written, had a "no returns, no refunds" policy on all TVs more than 37 inches, according to the magazine:
No returns, no refunds on television sets 37 inches and larger, the policy says. The company advises customers to "carefully inspect the package" when it arrives and refuse delivery if you spot damage or defects. But what if you don't notice a problem until you unpack the set, set it up, and plug it in? Overstock says take it up with the manufacturer.
It appears that Overstock has softened this policy as its site now offers normal returns on TVs under 50 inches. For televisions above that size, the company refers people to its "Oversized Item Return Policy," which still puts a lot of burden on the consumer but stops short of denying returns and refunds.
The company has not made any public comment on the list nor acknowledged a change in policy, but it's possible that being named on the naughty list caused the retailer to see the error of its ways. Of course, it's also possible the company was responding to consumer complaints, or even realized how bad a no-refunds, no-returns policy on anything made it look without the help of the magazine.
Daniel Kline has no position in any stocks mentioned. He stayed at the Opryland before WiFi was a thing. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.