When Customers Lie

If you’ve been in business for any time at all, you’ve probably come to the realization that the customer is not always right. Sometimes they’re not only wrong, they’re dishonest as well. How you handle situations with difficult customers says a lot about you as a company, and as a person.

In a recent blog post, Seth Godin talked about unreasonable customers. He gave a few reasons why you might tolerate a customer or client who makes unreasonable demands, such as if you promised you would. He also gave some great reasons why it might be best to fire a customer. He concludes:

In general, organizations are afraid to fire customers, no matter how unreasonable. This is a mistake. It’s good for you.

We recently had a couple of really difficult customers, and I thought I’d share with you my process for handling difficult customer situations.

The White Lie

As the owner of an online retailer, I see all sorts of customer service issues come across my desk. Any time an employee doesn’t feel comfortable handling a situation, or they need a second opinion about how to respond, I’ve encouraged them to forward the issue to me.

We recently had a situation with a customer regarding returned merchandise. Our return policy clearly states that all product must be in new condition to receive a refund or be eligible for exchange. They sent back five products, four were new and one was opened. We also noticed that the customer had repackaged the products in another shipping envelope, carefully transferred our shipping label to the new package, and written “refuse” on the outside of the package to be able to send the package back without paying postage.

We sent the customer our standard email letting them know we processed their return, and refunded them for the four products received in new condition. They quickly responded stating all products were sent back in new condition. After a few emails back and forth with customer support, the issue was escalated to me.

The customer demanded a refund, or they were going to call their credit card company and instigate a chargeback.

How Much is Your Time Worth?

We know the product (a pair of socks) was sent to the customer in brand new condition. The product retails for less than $10, and she had already exchanged several emails with customer support prior to the issue being escalated to me. She was irate, demanding a refund.

I know she was lying. We knew she was dishonest from the second we received her package. If she would commit fraud against the postal service to avoid paying $5 postage, what wouldn’t she lie about? But at the same time, the socks were only $10 (retail price, not cost) and we had other (good) customers to take care of.

Because I really believed she would contact her credit card company and issue a chargeback, I refunded her $10. A chargeback would cost me more time and money, even if I won, and I didn’t want the hassle. Sometimes it’s just not worth the fight, even when you know you’re in the right.

When Should You Fire a Customer?

There are lots of reasons to fire a customer, but the most obvious is that they are making unreasonable demands that are too costly or time consuming to meet. But there are really only a few reasons I will fire a customer: they are disrespectful or hateful to one of my employees, or they have a different set of values and I just don’t want to do business with them.

If a customer curses or screams at one of our employees, they know they do not have to listen. They are allowed to hang up on the customer and if they call back, I will be happy to talk with them. Those are typically pretty easy to deal with, because they either calm down and be respectful or the conversation is over.

But customers who just have different values can be difficult. I believe in honesty and integrity, and whether I’m at work or at home, those principles mean a lot to me. Some people just don’t feel that there is anything wrong with telling a “little white lie.”

In the example above, we knew the customer was dishonest from the moment we received her return. Even though I chose to refund her money, I did not want to do business with someone that was so clearly dishonest. When I emailed her about my decision to refund her for the opened merchandise, I also let her know that we would not be doing business with her again:

As a small, values-based and family-run business we have the privilege of choosing who we serve and we will not be doing business with you in the future. We have flagged your account and will immediately cancel any future order you place with us.

Being in business is not just about making money. You are at work for a significant part of your life, shouldn’t you work with people you like dealing with?

When Do You Fire Customers?

Have you ever fired a customer? What was the reason? I’d love to hear about it in the comments below.

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  • http://dohashawki.wordpress.com Doha Shawki

    Nice post….I agree that some customers do lie and some are very difficult to deal with. Definitely I would say a customer who curses would have to be stopped firmly. But the idea of firing a customer is a little bit of an extreme to me because you are risking their spreading lies about your company. One angry customer can cost you around 10 other possible customers even if he is telling lies. I would say that with someone who is not telling the truth you can either absorb the situation by making a point that you know he is not telling the truth and accept to give him what he wants (like you accepted the refund). Or very gently you completely refuse and tell him I am applying company policy but to tell the customer bluntly I don’t want to make business with you I think is too harsh and might cost you other potential business.
    I think firing a customer can be done only in cases of companies who sell products on credit basis. In this case some customers can avoid paying on time and keep stalling, those are the ones whom you can tell we’re clocking business with you because you don’t pay.

  • http://www.futprimitive.com Barbara

    While I am incredibly grateful for some wonderful clients, however, I have no issue of letting one go if I feel that they have crossed a line. I too put a high value on honesty and especially integrity.

    With that I would like to think that I have developed a bit of a system that allows me to get a idea of a potential customer before determining if it will be a good fit. In fact I just experienced a situation in which it had all the makings of a long & dismal path. I respectfully let them know that I had to leverage my time investment….

  • http://www.excaeruleo.com Brandon

    I worked for a small web design firm some years back, and we occasionally had to consider firing an impossible client.

    In one case, we had a client who we had contracted with for a “trade of services” instead of dollars — he gave us a full-page print ad in his fledgling magazine, and we built a website for it. Bad idea.

    He came into the office daily, unannounced, to interrogate our employees and waste our time with ridiculous requests and changes. Management diplomatically asked him to stop, and to direct all requests through themselves instead of annoying the designer, but he continued.

    We BEGGED our managers to fire the guy. Our ad had even been removed from his magazine already. They mustered up the courage, invited him in to a closed meeting to let him down gently…

    Only to emerge with ANOTHER website project promised to him. Sad to say, our managers did not defend their employees as valiantly as you, Mr. Eley.

    • Ted

      This is not a matter of a rude client but not having prepared the contract between said parties properly. A firm handshake doesn’t cut it anymore because both sides have their own ideas of what was promised to them. I ran into a senior who stopped me to ask if his painters would move his furniture to paint his apartment walls. I asked him what is the painter’s job? He said to paint; I then said to him that by his own admission, they were hired to paint and not move furniture and that he had to negotiate the complete project and not to assume anything else, other than painting the walls of the apartment.

      Myself, I tried to barter services but instead of a handshake, I took the time to write out the contract: I stated my expectations and what the other person could expect from me. In the end, the client refused because he could not comply to his liability (his business allows people off the street to come in) while I would have been responsible for teaching young children and since I didn’t have any control of security, I wrote in the contract that I would not be held liable.

      Contracts, help define the relationship and can help both manage expectations. After that, those expectations should be relayed to others so as to discourage resentment among employees and to foster compliance.

  • Mary

    I worked for a copy company for 12 years and realized that there is a type of customer that has learned that if they yell loud and long enough, things become free. I believe that not firing customers like this has merely encouraged the behavior. We did fire a few customers for this and ended up taking some back. When we did take them back, their tune, at least with us, had changed. I think we only had to ‘re-fire’ one. As for bad press created by fired customers, you might only end up eliminating similar types of customers. I personally go by ‘word of mouth’ but I also take into consideration the ‘mouth’ from which it comes.

  • http://www.adonim.net Angela

    That’s the beauty of being self-employed :-) Since the early 80s I had only two cases where I had to say “Sorry, I don’t think we resonate well with each other” and kindly recommended to search for another designer. It’s probably such a rare case, because I’m not kidding with whom I desired to do business with. Life is too short to waste it on anger or just for the money… :-)

  • http://www.thesimpleaffiliatesystem.com/simpleaffiliate/ Alex Newell

    I used to run a Natural Health Clinic and fired a customer who was immature and a total time waster. Out of 4 appointments he made I think he attended one punctually and cancelled and rescheduled the others.

    No way Hosea!

    BTW I love the gentle and graceful way you communicated to your ex-customer.

  • Ted

    Cursing, is not a sign of a bad customer. A bad customer is one that no longer buys from you. If you cannot allow the customer to “vent,” you not only infuriate the customer because of a bad product, but then you tell the customer they don’t have a right to be angry at they company that sold the bad product? When companies these days are rushing out shoddy products to only fix them afterwards (place X software companies here…oh yeah, that’s almost all of them) what other recourse does a customer have? Would you rather the customer create a web site called, http://www.shoddyproducts.com? and have the whole world see how bad the product was and how worse the customer service team dealt with it?

    I agree that the above case proves the author’s argument, but, lets get real, that’s not the majority of disgruntled customers.

    I agree that companies have the right to refuse service, that’s their right. I have stopped using companies because of their lack of help, support and/or shoddy products.

    In the free market, you either make a win-win deal, or lose. I have seen or encountered too many companies that don’t care about their clients, only their money.

    Thanks for the article.

    • http://www.brandoneley.com Brandon Eley

      Ted, I disagree. That’s the beautiful thing about owning your own business, though. You and I are free to decide who is a problem customer and who is acceptable! My wife (business partner) and my employees don’t want to have to endure being verbally attacked any more than I do. Now, I’m not talking about hearing profanity… that doesn’t bother me much. But someone cursing me directly, raised voice (possibly screaming), is not acceptable and I don’t have to do it. If you dont mind, that’s perfectly find, too!

  • Rolor

    I’ve had my fill of customers who lie, cheat and refuse to pay me for services I’ve done which they’ve benefitted from. Unlike the $10 sock example, these are customers who have cheated me out of thousands of dollars worth of service as a Web Designer/Developer. This has been a source of extreme hardship for me, and have led to my inability to continue providing such services. I have found that it is always those who are in a position to afford paying me for my time that are the ones who are so willing to create this hardship for me by their depraved actions.

    • http://www.brandoneley.com Brandon Eley

      Sorry to hear about your experience, Rolor. We’ve been stiffed a few times at the agency I work for as well, sometimes to the tune of 5-figures. It’s a tough pill to swallow, but now we get signed contracts and screen our potential clients with more scrutiny. It’s much better to turn down the work from a potential nightmare client than get stiffed and be out of thousands of dollars!

  • http://www.intellect-logic.com Swan

    Hi
    I am the CEO of my software company, we develop web applications for our clients from across the globe.

    We have fired some of our clients who were very unprofessional and dishonest with us, as we work on customized requirements of our clients, some clients try to get more than what was planned in the proposal.

    One very bad experience happed with us in recent time, that one of our client kept changing his requirements even after at the last time of delivery, he always used come and do some modification with software application even if we had spent hours and hours before developing that module.

    Still we tried to accommodate all his new requirements, the story continued for very long time and most strange thing was he never wished to pay for it.

    One fine day I found out that he was trying to corrupt two of my employees, then I investigate the whole issue and found 2 of my employees guilty in this, then very next day my management has taken a decision to fire the customer as well as those employees who were found guilty of doing wrong thing with our company.

    After this episode we learnt a lot, now I say only one thing with my team members “Work only with people we who we feel are honest, whenever we get any feeling that customer is having a wrong intention leave him..”

    We lost lots of money all this, we thought it is the fees to learn how to do business…

    Every person is not the same as every customer, I will say always do business with people who match with your frequency..even if you end up making less money its not a big deal you will be satisfied with what you have done.

  • http://www.autograff.com Richard

    Doha’s point about it being risky to fire a difficult one because they may lie about you misses one thing: the karma of knowing you are true to your beliefs. Someone may lie about you, but if you stay in business, doing what you do best, others will not necessarily listen to the lies told about you. A benefit of honesty and integrity is that you can trust that right actions will ultimately bring right results. My experience is that the people in my community, as Mary says above, “consider the mouth it’s coming from.” If a difficult customer tells lies about you, most people will know there’s something “off” about the lie.

    Some time ago I had a very difficult situation in which someone who felt wronged by my policies told practically everyone in my community (a small town) lies about me. I could move or stay where I was. I knew I was being true to my beliefs. I didn’t try to counter the lies or react to the person telling them. I ignored them, and went on with my business. Many of my neighbors told me about it later, and sympathized. I stayed in my community, and did what I always did. I’m still here doing it, the other person is not.

    • http://www.brandoneley.com Brandon Eley

      Thanks, Richard. I feel the same way… I think that people who fabricate lies about companies also probably lie in every other aspect of their lives. It’s very probably the people they are telling will know they aren’t trustworthy.