Cavaet Emptor Yes, But Wait There’s More…

CavaetEmptorButWaittheresMoreThe recent story in the NYT about the latest PT Barnum (although ironically enough this history buff says that we can’t even believe that story)  of the internets and his evil linking strategy has been a hot topic since Sunday. The issues of What Should Google Do and Flipping Off the Consumer for Fun and Profit have been well covered by Jeff Jarvis and Chris Carfi, respectively (Chris, love your visual analysis).

Chris and Jeff both invoke caveat emptor. Jeff refers to his Dell Hell experience and says he kicked himself after he began having problems with his Dell computer for not searching the web for “dell sucks” before he made his purchase. Valeria Maltoni also suggests that consumers take some responsibility and read before they buy although she provides an additional cavaet for the emptors: all reviews are not accurate.

Well, I wholeheartedly agree with Jeff, Chris and Valeria. There is more than enough information available to evaluate our purchases. In fact, there has been an exponential increase in available data points…we have come a long way, baby, from having only  Consumer Reports,  the Good Housekeeping Seal of Approval, 60 Minutes (or @60minutes as it were) and our next door neighbors to warn us about the obviously unscrupulous.

Now, we have Yelp, Amazon, our new friends and followers from Facebook and Twitter, iPhone Apps and yes, Google. We have at our finger tips megabytes of information to be totally informed consumers. On the surface, we should be forewarned and forearmed on every purchase we make.

But then, why is it that there are probably few amongst us who have not been flipped off? Why is it that no matter how savvy and diligent that we are, we still get sucked down the rabbit hole? And after we are sucked, where is the lifeline?…that there customer service thang that we are always reading about and writing about as being so important to business today? Oh and if that doesn’t work, well we have the government to protect us: The bright new shiny Consumer Credit Protection Act.

Raise your hand if you did not or if you even know someone who did not get a letter from at least one bank or credit card issuer either arbitrarily raising interest rates, lowering credit lines or summarily closing an account before the law went into effect that made it slightly more difficult to do or is not now, post “protection” paying higher fees on something than they were before they were protected? And why do we let our government endanger us and call it protection while they protect the banks at our expense. How 1984 doublespeak like.

And then we have those who would like us to believe that the financial crisis was caused by the Community Reinvestment Act that made banks loan money to deadbeats. Yes, and if you believe that, I have some Moody’s rated collateralized debt obligations I would like to show you.

Oh yes, loans were certainly made to people who couldn’t afford them but that was just the beginning of the journey for those loans. Barry Ritholz wrote recently of the  latest revelations in this mess, “the hiring of untrained, incompetent burger flippers to act as lawyers or paralegals in the processing of foreclosures:” Criminal and flagrantly illegal activities that represented “a degree of recklessness previously unseen in American jurisprudence.”

OK, but why do we not exercise caution? On one hand we have the theory of  Irrational Predictability. Dan Ariely, a behavioral  economist,  says that we simply are not logical, sensible and rational decision makers. We overpay, overvalue, underestimate and are consistent only in the fact that we consistently make the same mistakes over and over again. We are just wired that way. And that is why for instance, he says advertisers package products for us to try into silver, gold and platinum “specials.”Entice and distract us emotionally so that we turn off logic and reason? We gain meaning from being Platinum Kind of People, and the ultimate purchase decision has little to do with the price of the actual product itself. And that is of course why we don’t always use caution when we see something that we want or need to buy. And yes, “they” know that about us….salespeople, financial advisers, politicians, real estate agents, honest and dishonest.

As Antonio Damasio explains it, we make decisions using a combination of cognitive and emotional processes; emotions are in fact essential to rational thinking. Even better maybe….the thought of ourselves behind the wheel of the new BMW makes us feel so awesome that our brain works out an algorithm that makes it financially possible.

Or, the feeling of being obscenely rich created an algorithm that allowed the unsuspecting previously un-credit worthy to purchase the proverbial swampland, re-appraised as a suburban cul-de-sac, from snake oil salespeople, who got approval for sub-prime loans that they mostly defaulted on that became packages of AAA rated bonds sold as Collateral Debt Obligations (CDO), and then created synthetic CDOs insured through Credit Default Swap contracts (CDS) which ultimately led to the near collapse of the US and global economy that apparently could not have been foreseen or prevented in any way by the regulatory agencies, elected officials, watchdogs, congressional committees, pundits or any other reasonably intelligent person who you would expect to know that an algorithm that is built upon adjustable rate mortgage loans to sub prime borrowers just doesn’t seem, well, rational does it? They all see it pretty clearly now from exactly the same vantage point. When we speak of cavaet emptor and being an informed customer don’t forget to include your congressperson, senator, mayor, governor, or circuit court judge. The same advice that goes for “submit order” applies to “submit vote.”

I have to confess, that like Jeff Jarvis I purchased  a laptop without due diligence (In fact, in support of Dan Arierly’s repetitive  irrationality theory, I inexplicably did it twice before I learned the lesson to only buy MACS). After the problems started with the HP laptop and reasonable efforts on our part to get them resolved failed, a Google search that should have been done before the purchase, revealed that our failed motherboard was not our isolated problem despite efforts on the part of HP to convince us that it was, but was a big deal system wide motherboard problem.Whoops! Cavaet Emptor? Yeppers! But I had no reason not to trust HP (ignorance is bliss) or to believe that they would not take responsibility for fixing their defective product. And I bought it at a Best Buy for my son who picked it out from an array of shiny new laptops….it was like the puppy in the window, there was no way we were going to leave without it. Which is of course the reason that they are displayed that way.

I blogged about it. Toby Bloomberg blogged about it. And yes, it was social media, not all of the calls to customer service and tech support that got the problem fixed. It seems that HP has a person whose title is something like “customer advocate” (I don’t recall his exact title) who calls and fixes “public”{public relations} problems once they escalate to that point. By the time he called, all I wanted was my money back and I have not purchased an HP product since.

Which leads me to this point: Yes, I agree, customers need to accept some responsibility in situations as described in the NYTimes article. Before we buy something from someone we need to do some online research, aka at least type their name or the product name into Google. That isn’t always enough protection but it is a step in the right direction.  However, when you read what Borker was up to, you can see that he was a pretty informed scammer. He was a boyscout on Amazon because they wouldn’t allow him to sell if he was not. Lesson: Buy from Amazon.

The lesson regarding Ebay was perhaps not as clear as with Amazon since Borker apparently has figured out how to game the Ebay system by registering under different names and using feedback blackmail tactics. However, Ebay is a great example of an online ecosystem that for the most part works for buyers and sellers with a little due diligence. The feedback ratings are there to be reviewed and if you buy from someone with negative ratings and/or a “short” history you are taking a risk.  The same holds true for buyer ratings….if you sell to someone who has been a member since yesterday and has no transaction history then you are taking a risk that they will not complete the sale. I speak from experience on that one, but I have been a cautious seller ever since. Ebay and PayPal will protect you from unscrupulous buyers and sellers but they have a process and the process can be slow.

So back to the question: How come we continue to get taken? Borker, Madoff, the laptop, the appliance repair service, the lifetime guarantee, and so on. Well, because we are human….our decision process is guided by our minds and our hearts.

Why does being diligent seem so much like a full time job? Shouldn’t we just be able to buy something we want or need without launching an investigation? And if the pre-purchase investigation fails to uncover a problem, why do we then discover that the warranty isn’t exactly what it seemed to be or that customer service speaks English as a second language and is only available from 11AM-11:10AM and that you have to send the product to tech support in California because of your specific problem versus the in-store repair that you were expecting.

Legal remedies? Unaffordable.  The court of public opinion can be more effective and certainly less expensive…and as in the case of Dell Hell and Jeff Jarvis the story had a happy ending for both. Being an informed consumer can prevent problems but sometimes being your own advocate is necessary. Social media enabled advocacy either through a single Tweet, a video ,a Facebook wall post or an entire blog post can frequently help resolve an issue.

Yet the issue of the legal system relates back to the issue of being an informed voter. We elect our lawmakers who appoint regulators and in some states, 39 states actually, we elect the judges who interpret the laws. Other places and other levels, they are appointed by our elected officials. In some cases judges decide who has won an election. In Missouri we have something called the Missouri Plan which is explained here in more specifics but essentially calls for the appointment of judges by a non-partisan panel. The judges are then subject to what is called retention elections….a judges name appears upon a ballot and voters can either vote to retain a judge or not to retain the judge, majority rules. The problem is, voters don’t really know anything about the judges unless they or someone they know has appeared before them and most voters simply vote for retention.

This can be a problem and is a problem with one judge in St. Louis County, Judy Draper. The Missouri Bar voted to recommend that Judy Draper not be retained. In 2006 73% 0f attorneys surveyed recommended that she not be retained. Although she received notably fewer votes for retention than other judges, she was retained. Speaking from up close and personal experience with Judy Draper, it is my opinion that it is a travesty that she has not been removed from the bench for incompetence…incompetence that has caused my family great harm. If she were employed in most other professions I am confident that she would have been dismissed for her conduct only in our case, let alone what she has probably wrought for other families. And if not for the fact that she is  protected by judicial immunity she would be subject to legal actions. As it stands though, unaware and apathetic voters returned her to the bench. Again, cavaet emptor, voters of St. Louis County from the Missouri Bar and Marianne Richmond.

So, Google is not responsible for gamers and abusers….Google does at the end of the day provide the path to uncover the negative. We simply have to take the time for due diligence. However, there are still bad people out there trying to game our predictably irrational selves. We need to do our homework and reward those we trust, the good citizens of the internet and the planet, with our business, our votes and our positive feedback. And the bad citizens of the planet? Throw the bums out, don’t retain them, leave honest feedback for others.

Chris Carfi ended his post in reference to David Segals story,” It is, at its core, a contemporary story of good versus evil, updated just in time for the holiday shopping season.” I agree. Be careful!

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