Social Media: The Strongest Consumer Protection Weapon?

Between 1988 and 2008, the number of workers employed by American multinational corporations grew from 24.1 million to 32.9 million, with U.S.-based parent companies accounting for nearly 25 percent of the nation”s private-sector output1,2order viagra

ub>. In other words, big business is getting bigger. And thanks to advances in technology, globalization is easier than ever, suggesting that the trend is not going to stop any time soon. So what does that mean for consumers?

The potential implications are disturbing: as industrial power is consolidated into a smaller number of larger companies, availability of choice narrows, and one of the primary powers of consumer protection – the ability to embargo – is threatened. After all, if you can”t take

your business elsewhere and speak with your spending money, it”s hard to protect yourself from big, bad business. Somewhat ironically, though, the same technological advances that are strengthening corporations have also emboldened consumers. Social media in particular has been a powerful tool for consumers looking to protect themselves, as is illustrated in recent controversies concerning Bank of America and Verizon.

Given its role in America”s economic hardship of late, the banking industry isn”t popular to begin with. Bank of America didn”t help matters in September 2011 when it announced plans to charge a monthly fee of $5 to customers who use debit cards. Unsurprisingly, consumers didn”t enjoy the idea of being charged for something that had been free in the past, and a flurry of negative sentiment against Bank of America emerged online. From blog posts to insulting memes, Bank of America was in seemingly every consumer”s crosshairs. By October, the bank announced it would allow customers to avoid fees through means such as maintaining a minimum balance. The same day, JPMorgan Chase announced it was abandoning its own planned fees, so Bank of America was still on the hook.

Online petitions and protest via Facebook and Twitter eventually created enough heat that Bank of America backed off; the turning point seemed to be the proposed declaration of November 5, 2011 as Bank Transfer Day, a celebration of consumer strength through closing accounts with Bank of America and the like to begin business with local banks and credit unions. In the wake of the fiasco, other banks such as Wells Fargo, SunTrust and Regions elected to abandon similar pursuits.

The key to killing the fee?

The swift and wide-spread organization of the protest movement slots games via social media. These technological tools allow consumers to band together or disseminate information to massive audiences with minimal effort and coordinate actions across the globe. The ease and ubiquity of social media outlets make them an immensely powerful tool for consumer protection.

Of course, too much of any thing can be bad, and some cautionary individuals might suggest that the power of social media could be overwhelming in some cases. An inkling of this idea emerged when Verizon Wireless proposed a $2 convenience fee associated with paying bills. The company soon found itself in the hot seat, with Change.org announcing a campaign against Verizon hours after the proposal, and online petitions receiving tens of thousands of signatures in no time. Even the Federal Communications Commission caught wind of the controversy and said the fee was a cause for concern.

As you might expect, Verizon scrapped the fee and consumers declared victory. But everything happened so quickly that many people – even some protesting the fee – didn”t even have time to understand what the controversy was about. The so-called convenience fee only applied to single bill payments submitted by phone or certain online means. In fact, Verizon offered customers more avenues to avoid the fee – seven methods of payment – than to be subjected to it.

Additionally, the news first came to light when a leaked memo became the base for articles that quickly went viral. While the information was accurate in that case, internal communications

often leak out only after the plans they mention have changed, and the rapid spread of inaccurate or outdated information could subject a company to criticism it doesn”t deserve. And as Verizon saw, trying to clarify information after the chaos begins is hardly a simple matter.

But as anyone who has entered a Verizon store seeking customer service can tell you, the company is hardly innocent of any offenses. However, the fee controversy suggests that misinterpreted information can spread through social media at an unprecedented rate, with the potential for a company”s reputation to be harmed unnecessarily.

 

SOURCES:

1. Survey of Current Business; U.S. Multinational Companies: Operations in the United States and Abroad in 2008; Kevin B. Barefoot and Raymond J. Mataloni, Jr.; August 2010

2. Business Roundtable; How U.S. Multinational Companies Strengthen the U.S. Economy; Matthew J. Slaughter; March 2010

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