'Forgiveness ratings' finds credit card issuers unforgivable

Industry ranks last among those that consumers would forgive

By Martin Merzer

When something goes wrong, American consumers are reasonably willing to forgive their supermarkets, their parcel delivery services, even their auto dealers and -- despite the Great Recession and the cratering of countless portfolios -- their investment firms.

But their credit card companies? Not so much. In fact, practically not at all.

A just-released survey shows credit card issuers in last place when it comes to earning consumers' forgiveness for mistakes. Among the industries that scored better than credit card companies in the 2012 Temkin Forgiveness Ratings: airlines, health plans and the companies that keep cutting off your cable television and/or internet service and botching the bills and channeling their "customer service" calls to India, the Philippines and, for all you know, Saturn.

"The results, with credit card issuers falling to the bottom of 18 industries, show that consumers don't like credit card issuers," said Bruce Temkin, managing partner of the Temkin Group, a "customer experience" research and consulting firm based near Boston.

"Think about people you know," he said. "If you like them, then you're willing to forgive them for just about anything. With people you don't like, it's hard to forgive them for even the littlest of issues."

Though a few credit card issuers, among them USAA, a financial services firm that primarily works with members of the military and their families, performed well in the survey, the credit card industry as a whole earned a "very weak" rating, the only industry to score that low.

The American Bankers Association, which represents banks and credit card issuers, declined to address specific findings of the survey, preferring instead to issue a general statement.

"Most people see credit cards as a useful financial tool and have a positive relationship with their own card issuer," said Jeff Sigmund, the association's senior director of public relations. "Providing good customer service and resolving any issues quickly is of paramount importance and remains our highest priority."

On the other side of the equation, consumer advocates were not surprised by the survey's results.

"Credit card companies will keep coming in last as long as they use 'gotcha' business models designed to hurt consumers -- then refuse to help even the small number of consumers who complain," said Ed Mierzwinski, consumer program director of U.S. PIRG, a federation of consumer interest organizations around the nation.

Christopher Viale, president of Cambridge Credit Counseling in Massachusetts and vice president of the Association of Independent Consumer Credit Counseling Agencies, which represents 32 nonprofit credit counseling companies, attributed much of the discontent to the crucial role credit cards now play in American lives.

"One of the things it's important to understand is that credit cards are a lifeline to a lot of American consumers, which helps them handle expenses that are not expected or otherwise provide needed financial support," Viale said. "So, when this lifeline catches a consumer off guard with a policy change or a rate change or just anything that affects their ability to use that tool, that's going to have a long-lasting effect on a consumer's perception of that relationship."

Credit card issuers came n last place when it comes to earning consumers' forgiveness for mistakes. Click image to enlarge.

Another potential factor: Credit card relationships tend to be ongoing. That is, most credit card users pay off their debts over long periods of time. So, Mr. or Mrs. Aggrieved Customer is reminded at least once every month -- for year after year -- that he or she had or still has a problem with the credit card issuer. This is not a terrific leading indicator of forgiveness.

"If you had a hassle in January, there's a good chance that the hassle will continue into February and beyond, and the only way that the hassle will be eliminated is for the consumer to come up with a lot of money," Viale said.

Again, not a promising formula for love.

"Credit card issuers, except for USAA, haven't built up the goodwill with consumers." Temkin said. "I think consumers feel like credit card issuers just don't care about them."

Despite their abysmal performance, credit card companies could have fared even worse, and, in fact, they did during the firm's 2011 survey. Back then, the issuers stumbled into a  "net goodness" rating of only 3 percent. This year, credit card firms managed to boost that to 13 percent. (For perspective, the top-rated supermarket industry came in at 39 percent this year.)

"Every industry saw improvements in their Temkin Forgiveness Ratings between 2011 and 2012, which is a real positive sign that overall consumer sentiment is heading in the right direction," Temkin said. "Credit card issuers' improvements were in the middle of the road compared with other industries, so that industry pretty much just kept up with the overall rise."

His firm's latest survey of 10,000 American consumers involved 206 companies in 18 industries. The "net goodness" ratings are averages based on responses to questions about three elements of the consumer experience: functional, accessible and emotional.

Some industries easily forgiven
In addition to the supermarket industry, retailers, appliance makers and, surprisingly, parcel delivery services topped the list. When it comes to individual companies, USAA, Hyatt, credit unions (which were grouped together in the survey as a single entity), and the H-E-B and Hy-Vee grocery chains merited the highest ratings.

Though rarely studied or discussed, the degree to which companies earn forgiveness for their miscues can be crucial to their success or even their survival, Temkin said.

"Every company makes mistakes," he said. "When they happen, an unforgiving customer will more likely respond negatively by complaining to other people about the company, use the company's products and services less frequently and not even consider the company for any future purchases."

On the other hand, Temkin said, "A forgiving customer will forget about it or give the company a chance to recover."

Alas, that sort of forgiveness obviously does not materialize very often when it comes to credit card issuers and their customers. Viale said his credit counselors see this sort of thing play out every day.

"If the card issuers want to improve this situation," he said, "they really need to show more leniency during tough times. That's the most important thing. We talk to consumers who have anywhere from seven to 10 credit cards, and the card they want to keep open is with the bank that's treated them the best."

He and other consumer advocates advised frustrated credit card holders to take their unresolved complaints to higher authorities, including the new Consumer Financial Protection Bureau.

"The best hope for consumers is to complain to the CFPB, which should be able to fix this broken market," Mierzwinski said.

Published: April 19, 2012

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