Two Dollar Lawsuit leads to Million Dollar avoidable publicity fumble

Negative reviews from consumers are serious business. They can lead not only to lost revenue, but higher costs when they originate on sites like Ebay, where merchants are charged more for listings when their review scores fall below a certain level. But handing complaints poorly can cost more, much more, as a medical equipment supplier in Ohio has learned.

It started innocently enough… Med Express miscalculated postage on an order and shipped it with $1.44 postage due.  But when the buyer left negative feedback on Ebay, Med-Express responded in the worst possible way:

On March 25, Med Express Inc. filed a claim against eBay and Nicholls, asking for an injunction to remove the negative comment, accusing Nicholls of “falsely and deliberately” slandering Med Express’ good name and reputation. It sought to have the comment removed from eBay.”

Bad idea. There are times when litigation is the only solution to vexing reputational issues, but large companies suing customers almost never works, unless it is part of a larger pattern of intimidation or interference. And it didn’t work this time either:

Med Express, after publicity over their suit, finally threw in the towel. Radey apologized and said he was withdrawing the lawsuit against Nicholls and eBay.

“Please understand that our customer was never the target of this lawsuit. We had instructed our attorneys to ask for $1 in damages. Her feedback was also never an issue. We fully support her right and all of our customers’ right to leave any feedback they desire – true or otherwise!” Radey wrote in a statement. “The issue involved Detailed Seller Ratings or DSRs. The low ratings caused us to lose our Top Rated Seller Plus standing.”

Those ratings are significant for online merchants on eBay. “Based on our current volume, this was a potential fee increase of tens of thousands of dollars over the course of a year,” he said.

Radey said DSRs can be removed only by court order, “and I was told such court orders were not uncommon.”

So, if litigation is a bad idea (it is), what are the steps in building an effective review strategy? We advise clients to take the following steps:

  1. Create an “early warning system” in-house to rapidly identify and resolve consumer facing service problems, especially when there is a fairness issue attached
  2. Survey customers at the end of transactions and ask them to rate their experience. All ratings below a threshold should lead to immediate elevation to customer service for resolution
  3. When you get a bad review, reach out and try to resolve the underlying issue. If you were wrong, apologize… and mean it. Most bad reviews come not from the facts of the experience, but the poor resolution of the problem
  4. Encourage positive (and accurate) reviews, so that people seeing your reviews get a balanced view of your business

And, as a general rule, if your story makes it to ABC News, you’ve done something wrong.