I purchased a couple of new beds for our home at a national mattress store. One was a fairly fancy model that is adjustable, vibrates and has other bells and whistles. I would normally pay for such a purchase outright, but the mattress store was offering free financing for a year. I thought, “what the heck, why not?” So I paid the monthly principal amounts over the course of 12 months like clockwork. Toward the end of this one year period I started looking for a payoff balance to show up on the monthly statement, but it never did. Then I received a statement showing a large amount of “deferred interest” that when calculated produced an exceptionally high interest rate.
In looking back at the previous month’s statement (four pages of legal-size paper), I found a single sentence in small print advising me to look elsewhere in the statement for an acceleration amount. I finally found the payoff figure – again in small print. Unfortunately I had missed the deadline by ten days and now owed over $3,000 in interest charges. I called the national bank that had purchased the paper from the mattress company and pointed out what my intentions had been from the outset and that the small print notice was deceptive and easily overlooked. I spoke with a supervisor and then a manager who ultimately cut my interest cost by 75%. I still contend that the interest should have been fully waived.
The national bank involved in this incident was clearly playing a “gotcha game.” There’s no doubt in my mind that they intentionally used fine print and required the customer to hunt through the bill to find the amount owed. This is despicable behavior and does nothing to help the cause of entrepreneurship. I am not a fan of a lot of government regulation, but it’s situations like this that trigger calls for more regulation in the first place.
As entrepreneurs we should look at our business practices to see if we too are playing the “gotcha game.” Are the documents we use with our customers very clear relative to what is owed as well as the terms and conditions for payment? Or are we using fine print, misdirection and incomprehensible language to obfuscate and confuse the customer? And if we’re doing this, what is our end game . . . to shake down the customer for extra dollars?
Companies that are winning in today’s environment are focused on culture, product and the customer. Profitability at any cost isn’t part of this calculus. Businesses that gouge their customers like the national bank with which I dealt, will ultimately suffer through new regulatory initiatives and/or customer abandonment. We entrepreneurs have a golden opportunity to identify competition that is perpetrating such behavior and differentiate ourselves in striking fashion. With the right messaging, winning customers from the bad actors should be relatively easy.
The integrity we maintain with our customers is one of the most valuable assets we possess. Playing the “gotcha game” can quickly turn that asset into a liability.
This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.