Consumer Reports: Naughty & nice businesses

Published On: Nov 25 2013 06:33:02 AM EST
JACKSONVILLE, Fla. -

Policies, like products, sometimes fall short of expectations. And for the fourth year in a row, Consumer Reports is releasing its annual Naughty & Nice list, a campaign to shed light on company policies or practices that help or hinder the public.

The list includes retailers, airlines, telecom companies, and others that we've dinged for fees, fine print, or punitive practices; others were lauded for generous and outstanding customer service, for instance.

Several Consumer Reports staff members who cover retailing, finance, electronics, and other beats contributed to the list, as did consumers on Facebook. In each case, Consumer Reports has verified the policy and/or practice either by direct contact or reading through the details on the company’s website.

Although the companies are listed by name, other businesses may engage in similar practices—for better or worse. And praise or blame for a specific policy doesn’t mean we give a thumbs-down or thumbs-up or for everything else that company does or the way it treats customers.

Naughty

Amazon
The world’s 11th-largest retailer, with more than $61 billion in annual sales, recently raised the requirement for free Super Saver shipping on eligible items by $10, to $35.

Best Buy
The electronics chain has a stern warning for customers who plan to make a return: Even if you have a receipt, you will need to present a photo ID and Best Buy retains the right to store information from your ID in its database to track future returns and exchanges. “Based on return/exchange patterns, some customers will be warned that subsequent returns and exchanges will not be eligible for returns or exchanges for 90 days.”

BJ’s Wholesale Club
The warehouse membership club, which charges customers $50 a year to shop online or at 200 stores, mostly in the Eastern U.S., won’t accept returns of perishable products such as food and flowers. That’s in contrast to the policy at the two largest clubs, Costco and Sam’s Club, which will take back any item for any reason, usually without time limit.

Fry’s Electronics
Retailers typically allow 15- to 30-day returns on most televisions, though the restrictions may be tighter on returns of large-screen sets. But Fry’s policy is tougher still. “Refunds cannot be given on televisions 24 inches and larger.”

Kmart
Once upon a time, merchants closed their doors on major holidays such as Thanksgiving, giving employees the day off to celebrate with family and friends. Then came Black Friday madness sales, with many chains whipping shoppers into a frenzy with doorbuster deals beginning Thanksgiving night or early Friday morning. This year, mass merchant Kmart has taken holiday shopping to a new low. The 1,200-unit mass-merchandise chain recently bragged that its stores would be open for 41 hours straight, starting at 6 a.m. Thanksgiving day through 11 p.m. Friday, making it just another marathon work day for those in the retail industry (though its parent company, Sears Holding Corp., says that stores are staffed with seasonal associates and those who volunteered to work).

Lord & Taylor
Hardly a day goes by that one department store or another doesn’t advertise the biggest blowout savings event of the year. But Lord & Taylor recently raised the hyperbole to new heights. “Save 25 percent at the ultimate one-day sale,” the ad proclaimed. But the fine print of restrictions was staggering. More than 70 brands and categories were excluded, including watches, certain jewelry, beauty products, cosmetics, women’s designer coats, fragrances, luggage and more. It makes you wonder what actually was on sale.

QVC
You’d think price transparency would be a good thing. But in the case of the home-shopping juggernaut QVC, there are so many categories of prices that it’s hard to tell whether you’re getting a great deal or a great spiel. QVC prices goods 20 different ways. For example, there’s the “QVC Price,” also known as the everyday great price, “Today’s Special Value,” a steep one-day markdown, the “Event Price,” another temporary deal, and “While Supplies Last Price,” identifying big savings on items in relatively short supply. Then there’s the “Last Clicks” category, featuring a limited quantity of leftovers priced to sell, which is not to be confused with “Clearance Price” products, whose prices have been reduced to make room for new inventory. That’s only six of the categories.

Raymour & Flanigan
Deferred-interest credit cards let customers pay for purchases interest-free for a set period. But there’s a heavy burden on borrowers who fail to pay down the entire amount by the end of the promotional period: the prevailing interest rate gets applied retroactively to the entire original balance, not just the remaining amount you owe. Raymour & Flanigan isn’t the only chain that offers deferred-interest plans. Many big players, including Apple, Walmart, and Best Buy, for instance, do, too. But the furniture chain (and the already “Naughty” Best Buy) features the option on its home page. Failure to comply with the terms would mean an APR of about 28 percent.

Toys ‘R’ Us
On the upside, Toys "R" Us last summer enhanced its in-store price-matching program to include 11 giant online competitors, including Walmart, Target, Best Buy, Sears, and Amazon. On the downside, the chain has suspended its price-match policy on Black Friday, nor will it match deals advertised online during the week of Black Friday (starting Nov. 25) or on Cyber Monday (Dec. 2).

United Airlines
Airlines have created so many “special” or privileged customer classes that even a low-boarding number can require a substantial wait. But one thing you can usually count on is preboarding for families with young kids. Not at United. “Families with infants or with children who are under the age of 4 may board the aircraft when their group number is called.”

Nice

Bed Bath & Beyond
Few shopping irritants are as annoying as purchasing an item just before the price drops. If you ask, many stores will adjust the price within a week or two of purchase. Bed Bath & Beyond’s policy is even more liberal. The chain periodically distributes 20 percent discount coupons that are often valid for a long time. A customer-service rep told us that customers can bring in their receipt and the coupon as long as it’s valid to obtain an adjustment.

Citibank
Late fees for being tardy on monthly credit-card payments typically run $15 to $35 for each infraction. The Citi Simplicity card from Citibank has built-in forgiveness and never assesses a fee for late payments. But remember, late payments may still be reported to credit bureaus, bringing down your score. And though the card doesn’t impose a late fee, a pattern of tardy payments is likely to lead to the closing of your credit card.

Consumer Cellular
Few services are weighed down with as many fees and penalties as the cellular communications industry: Early-termination fees (which can top $300), restocking fees for returned devices (starting at about $35), “upgrade” fees for simply buying a new phone, activation fees, and so on. Consumer Cellular, a highly rated service provider in Consumer Reports surveys, does business differently: “With Consumer Cellular there are never any contracts to sign, penalties for changing plans, activation fees or shipping charges.” And Consumer Cellular offers a 30-day money-back guarantee to cancel your service and get a refund if you’re dissatisfied.

Hampton Inn & Suites
The 1,800-unit brand, owned by Hilton, has a simple, straightforward pledge. “Friendly Service, clean rooms, comfortable surroundings, every time. If you’re not satisfied, we don’t expect you to pay. That’s our commitment & your guarantee.” The guarantee is “boldly etched” on the front desk so that it is constantly visible to employees and guests.

Lands’ End
The catalog merchant has an unconditional “Guaranteed. Period.” policy that entitles customers to return for refund or exchange any product at any time, for any reason. That largesse extends even to personalized items that have been hemmed or monogrammed.

Neiman Marcus
Taking a page out of Nordstrom’s playbook, the fancy department store chain this fall began offering everyday free shipping and free returns on most items.

Sony
The global consumer electronics and entertainment giant has leaped into social media (Google, Twitter, YouTube, Pinterest, Foursquare, LinkedIn), using it as a tool to communicate with customers and respond quickly to questions and problems. “With tens of thousands of discussions mentioning Sony each day, we strive to take advantage of the global conversation to better service our customers, to learn from their experiences and to create better products and services,” the company says.

Southwest Airlines
Airlines typically allow flight cancellations within 24 hours of booking without financial penalty. Southwest offers greater flexibility if you need to switch flights. You can modify your itinerary without time restriction and simply pay the difference in cost between fares. At some other airlines, such changes can add hundreds of dollars in fees.

T-Mobile
The telecomm company earns kudos for bringing transparency to cellular pricing by explicitly separating the price of the phone from the cost of service. Contract carriers typically recoup the "free" or "discounted" cost of a phone through a charge buried in the monthly fee for cellular service. After 24 months, the carrier breaks even on its subsidy but keeps collecting the fee as long as you keep that phone. Not T-Mobile. After you pay two years of fully disclosed phone installment payments, T-Mobile stops collecting the charge for your paid-up phone.

Walmart
The mega merchant brought back its layaway program, but with a consumer-friendly twist: It eliminated the administrative fee typically required to open an account. Last year, Walmart charged a $5 service fee to open a layaway account. But you still need to put down $10 or 10 percent of the product’s price, whichever is more. And there’s a $10 cancellation fee if you change your mind, something Walmart didn’t impose last season.

Click the links for previous 'Naughty & Nice' lists 2010, 2011 and 2012.

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