Large companies like to give the impression they put customer satisfaction above all else. They constantly tout their rankings in surveys such as those conducted by J.D. Power.
Yet it also turns out they are frequently sued by groups of customers for deceptive practices. Over the past two decades, major companies have paid out over $25 billion in damages and settlements in class action and multi-district consumer protection lawsuits filed throughout the United States. Some corporations have been involved in multiple cases, and a few have had total payouts of more than $1 billion.
These findings come from a compilation of consumer protection lawsuits prepared for inclusion in Violation Tracker. Using court records, we have documented more than 600 successful legal actions dating back to the beginning of 2000. These are only cases in which a company was accused of cheating its customers by overcharging for goods and services or engaging in false advertising. This list does not include cases involving issues such as product safety or privacy violations, which were previously added to Violation Tracker. It also does not include cases brought by government agencies, which were also already in the database.
One thing jumps out from the new list of cases: banks, insurance companies and other players in the financial services sector account for a far larger portion of the penalties than any other part of the economy: over $14 billion in 249 cases. This is more than 55 percent of the penalty total and 40 percent of the cases.
Half of Big Finance’s penalty total comes from a handful of companies. Bank of America paid out over $3 billion in 29 cases. JPMorgan Chase racked up $2.3 billion in penalties in 26 cases. Wells Fargo’s penalty total is $1.3 billion from 21 cases. State Farm Insurance ranks next with $669 million from six cases.
Here are just a few of the abuses Bank of America has been accused of committing: imposing excessive overdraft fees on checking accounts; charging military customers interest rates above federally mandated limits; enrolling customers in credit protection plans without their consent; applying late fees on credit card customers who actually paid on time; and forcing home mortgage customers to purchase excessive amounts of flood insurance;
Outside the financial sector, the biggest penalty totals belong to Dominion Energy ($2.5 billion), Western Union ($508 million), Apple Inc. ($462 million), BP ($414 million) and General Motors ($389 million). Apple’s alleged transgressions ranged from distributing iPhone software updates that slowed the device’s performance to the renewal of app subscriptions without customer consent.
While most of the cases on the list involve prices, fees and other monetary practices, about 100 relate to the quality of the goods and services being sold. Over $1 billion has been paid out by companies accused of false or deceptive advertising and marketing. The single biggest penalty of this type is linked to Acer America, which paid an estimated $280 million to resolve allegations that it misled customers about the Windows operating system installed on its laptop computers.
Behr and its parent Masco paid over $100 million to settle claims that they falsely advertised their wood sealants as protecting against mildew damage. Many of the smaller settlements involved allegations that producers of food and personal-care products falsely advertised their products as organic or natural.
While many of the corporate defendants in these cases will insist they settled out of expedience, it seems clear that many large companies have a tendency to engage in dubious practices. If they are truly concerned about customer satisfaction, putting an end to these practices is a good way to begin.