The Best Way to Respond When You're the Victim of Poor Service

Forced to pay cash for a new house... What the experience reminded me of... In a red-hot housing market, things don't always run smoothly... The best way to respond when you're the victim of poor service... Two main reasons to complain (and the most effective ways to do it)...

A few weeks ago, I (Kim Iskyan) made the worst financial decision of my life...

It was a bad choice on the Napoleon-invades-Russia level... like one of the dozen publishers that turned down J.K. Rowling's first Harry Potter book... or like the captain of the Titanic thinking the ship had enough lifeboats before it left England.

And the thing is... I ventured down this path of poisoned financial thorns (and got caught in the spokes of the housing boom) while armed with a full set of information. I knew exactly what I was doing...

The cause of my face-palm bad decision was simply the bank I was dealing with – it's one of America's biggest, and its name rhymes with "pace." The bank was incompetent, inefficient, and inept. And I was left with no other choice...

I was forced to pay for my family's house, in cash and in full, entirely with our own assets.

Fortunately, I could do that (though I had to liquidate part of a retirement account to raise the cash)... I know not everyone can. But it was still such a silly financial maneuver – given how cheap it is to borrow money today with a mortgage – that it made me physically ill.

It might sound like a cop-out... but this also really wasn't my fault. That's what made it all far, far worse. My face-palm bad decision was the result of the bank not being able to provide a mortgage by the time it had promised.

But the focus of this Digest isn't entirely about my personal financial Hindenburg...

Instead, it's about what I did next. And really, as you'll see, it's about getting your money's worth – in two different ways.

I'll briefly talk about why it makes financial sense to be in real estate today, but the bulk of today's essay is about what my "forced to pay cash" experience reminded me of...

It's another way you can get your money's worth... And it's not something we normally talk about.

It's called complaining (as I did to the bank).

There's a way to do it effectively... And depending on the stakes involved, it can be as lucrative as anything else – or at the very least, fulfilling or a way to soften the blow of a life-changing decision you're cornered into making.

First, let's talk about the housing market...

You see, I recently moved to the U.S. with my family from Ireland.

We found a house and applied for a mortgage – submitting to the required financial equivalent of a colonoscopy-meets-root-canal... The process involved mountains of paperwork, justifying cash flows, and extended discussions of assets. (Not long ago, anyone capable of fogging a mirror could get a mortgage... Those days appear to have gone the way of the rotary phone – at least, in my experience.)

And despite multiple promises that Chase – you knew the bank already, right? – would deliver the mortgage on time, that everything was in line, and that there's nothing to worry about, Mr. Iskyan... the process did not go smoothly.

What usually happens – especially in the midst of an epic housing boom like we're in today – when your mortgage doesn't come through on time, is that you can't close the deal. And then, they move on to the next person in line... Your house is sold to someone else.

This is what I feared was going to happen to my family...

In our case, Chase told us that the external contractors used for the appraisal of the house wouldn't complete the process until days after I was supposed to finalize the purchase... So, because of all the excess red tape, that meant no mortgage by the time I would need it.

Life isn't black and white...

Sometimes, you must make decisions that are best for you or your family, even if they don't make the most sense on paper. And after moving all the way across the Atlantic Ocean from Ireland, we didn't want to spend more months living in a hotel while looking for another home when the perfect one was right in front of us...

So I ended up paying with cash.

Today, this amounts to what could be a financial crime...

That's because right now, it's a financial crime not to borrow money if you need it.

Lending rates are around 2% to 3%... while annual inflation, as of the end of June, is running at 5.4%. That means folks in the U.S. can borrow at significant negative real interest rates – that is, the cost of borrowing is below inflation.

In other words, if current inflation rates continue, the $100 in your pocket today will be worth $94 and change (in terms of purchasing power) in a year.

If you can borrow depreciating dollars to buy a hard asset (like a house) – or invest in the market (which is a bit riskier) – you're making a great move. This is all driven by real yields on U.S. government bonds, which hit record lows at nearly negative 1.2% in early August (for 10-year Treasury notes).

Of course, it's no secret that interest rates are below inflation... That's partly why, as of the end of May, housing prices in the U.S. were up 16.6% over the previous 12 months, according to the S&P CoreLogic Case-Shiller Index. That's the biggest jump in more than 30 years.

(If I didn't decide to pay in cash after my mortgage debacle, the sellers of the house I ended up buying would have sold to someone else – likely at a higher price.)

When borrowing money is so cheap – in real terms – it makes sense to borrow as much as possible. But weighing all factors, it just wasn't worth it to me to do that.

I didn't want to let my bank off the hook, either. That brings me to my second big point today – the best way to respond when you're the victim of truly terrible service...

In other words, I want to help you master the art of complaining...

I've learned a few things on this point over the years...

Most of the time, no one wants to hear someone else complain about the weather or their boss... or how their spouse doesn't walk the dog. And as your mother likely told you when you were growing up... if you can't say something nice, it's better to say nothing at all.

But the purpose of the kind of complaining I'm talking about is to strategically get what is, truthfully, due to you... It's how to gain redress for a service not (or poorly) delivered. And it's for something that caused you real harm. It's about getting a serious wrong made right.

Said another way, generally, I find it's best not to complain... unless you simply must. And there are two main reasons for that...

Reason No. 1 to complain – Principle...

I'm talking about a policy that doesn't make sense to you... something in the way a service provider treats you... or a promised product that isn't delivered. And because of that, it really gets your goat.

Maybe it's getting telemarketer calls at dinnertime... your (grand)kids' school banning 1984... your neighborhood homeowners' association rules about grass length... the cable company's endless automated voice menu... or the way that IRS forms seem designed to confuse.

Maybe it's a small thing... or maybe it's minor to everyone but you.

Perhaps your complaint points to an underappreciated fundamental injustice in our world.

If it's about principle, it's probably not about the money... But figuratively speaking, it's an issue that's important enough to you for it to be the hill that you die on – or at least, take a few bullets on – in terms of time and energy.

Reason No. 2 to complain – Money...

You feel like you didn't get what you paid for, were ripped off, or suffered when something wasn't finished on time – and you want recompense.

This could include a new-car warranty that isn't what was promised... terrible service and lousy food at a pricey restaurant... a vacation package that was marketed as heaven on Earth but turned out to be cut-rate purgatory... a fund that charges you fees that your investment adviser didn't tell you about... or – as in my case – a bank that didn't do its job in time.

The sum in question doesn't have to be a lot... And often, principle and money tend to overlap. To some people, money is a matter of principle.

But before you launch a campaign to be made whole – whether it's to satisfy your itch for a "sorry we messed up" response, a financial demonstration of apology, or both – be sure you know what you want to get out of complaining...

Like a lot of things in life, if you don't know what your goal is from the outset, you won't know if you've achieved it.

For me, it was the bank's job to get a mortgage done... and I didn't appreciate that they dropped the ball. That ineptitude cost me – a lot.

So I wanted money back... I wanted the initial cash I had to front to start the mortgage process. And I wanted an honest-to-goodness apology – not a mealy-mouthed "sorry for the miscommunication" non-apology or a pass-the-buck explanation that failed to recognize just how put out I was.

It was time to complain. But it's not easy...

Let me step back for a moment here to ask a question that applies directly to this situation...

Why is customer service – whether it's banks, airlines, cable providers, or car companies – often so bad?

It's a sad – but not surprising – reason...

You call to complain, and you wander through a voice menu... Then you're on hold... Then you need to explain your situation to three different people before being told that nothing can be done... And afterward, you're even more annoyed than when you started.

A 2017 survey found that more than three-quarters of customers who complained to a company's customer-service department were less than satisfied with their experience.

But why? From a study described in Harvard Business Review ("HBR") in 2019...

Companies purposely make callers jump through hoops with the hope that they'll simply give up. When this happens, the company saves money on redress costs... some companies may actually find it profitable to create hassles for complaining customers, even if it were operationally costless not to.

(If this sounds downright stupid, trust your gut.)

Customer service is often so bad 'because it's profitable,' HBR concludes...

In other words... the more trouble you – Mr. or Mrs. Customer – have to go through to achieve satisfaction on your complaint (which will, of course, cost the company money), the less likely you are to see it through.

It's basic human psychology... All else equal, we tend toward inertia.

It's not surprising that the worst customer-service offenders of all are companies with a large market share – "think airlines, cable, and Internet services," HBR says. (I'd add big banks to that list, too.) These companies...

... can get away with bad practices because customers have nowhere else to go. This may help us understand why some of the most hated companies in America are so profitable.

Of course, not all companies have lousy customer service... In a recently published annual survey, Newsweek magazine listed USAA insurance, financial-services company Vanguard, and Disney Parks and Resorts among the best customer-service providers.

For my money... credit-card giant American Express (AXP) and the Four Seasons hotel chain are among the few companies where the customer is always right. And not to toot our own horn, but Stansberry Research's customer service is absolutely world-class... If you ever need to call them, you'll see what I mean.

In any case, there's a 'right' way to complain to maximize the chances of getting a positive response...

And it's what I used to succeed this time...

Say you've decided to lodge a complaint, and you're ready to dig in... You want to get an apology, money back, a credit, or whatever it is you're looking for.

Start off by calling customer service... but assume that the first two or three people you speak with won't be able (or willing) to help you. They're only stepping stones – or barriers – to a supervisor or someone higher up the food chain who might actually be able to help you.

You'll probably have to explain your situation multiple times before you get someone to take action...

Prepare your "elevator pitch" – that is, the quick-and-dirty explanation of how the service you received fell short. You'll likely need to use it multiple times before you get the ear of someone actually empowered to help you... Save the more detailed explanation for that person.

When you're describing your situation (and frustration), it helps to limit the vitriol...

Keep it impersonal... The unpleasantness you're facing is not the fault of the customer-service representative that you're talking to – so don't blame him or her. For example, make sure you say, "[name of company] provided service that makes a prison feel like luxury by comparison" – rather than using the pronoun "you."

And yes, you can get mad – people, including customer-service representatives, respond to emotion... But keep it under control and on the decent side of rude.

Most importantly, you need to get the person on the other end of the line on your side. Explain what went wrong – and how it hurt you...

"Since I was bumped from the flight, I missed my granddaughter's birthday party, and she cried all afternoon, and she'll never have another seventh birthday" will get you a lot closer to a credit of frequent flier miles than an expletive-laced tirade about how you had to wait three hours for the next flight.

If you win a customer-service person to your side, he'll become your advocate. And then, you're on your way to getting what you want.

If you're good with the written word, you can also write out your argument...

That will help you get it out of your head – and it also means that you don't have to repeat yourself. Explain what happened in a clear, concise way... Write (mostly) like you would if you were telling a friend.

Include details like how long you've been a customer (no one likes losing a longtime patron)... and how much money you've spent over the years at the company. If in the past you've been thrilled with their service, mention that, too – companies, like children, hate to disappoint high expectations.

The trick, though, is to get your words in front of the eyes of the right person. If you've already spoken with someone helpful, send what you've written to him or her.

Then, go online to find the name of the head of customer relations at the offending company... And for good measure, send your missive to the CEO as well. Eventually, you want a person who gets that you've been ripped off – and wants to help you.

A customer-service "hack" is to get in touch with a company's media relations people... If it's their job to be in touch with the outer world, it will be a lot easier to find their contact details.

At the top of your e-mail, explain who you're actually trying to get in touch with – and then ask if they can please help you do that. Since the media is all about communication, they're probably going to send it to the right person.

That's what I did in my pursuit of justice...

After I called up the Chase chain of command, all I received was some variation of "what a bummer but don't blame us." So I e-mailed the media-relations people, as well as the head of Chase's mortgage business.

I also sent a note to a Chase customer-support account on Twitter... and got a response. Even if you're not fluent on Twitter, it's worth exploring... When you're trying to get a complaint addressed, you have to use every soapbox available.

Eventually, I got through to someone who was prepared to offer me more than milquetoast apologies...

I'm happy to report that Chase is refunding some of my upfront mortgage expenses. (My half-joking suggestion that they reimburse my retirement fund was met with silence.) And beyond that... I was told that my long-winded written explanation of everything that went wrong – and my terrible experience, in general – would be used for training purposes.

I was fortunate in that I could pay cash for the house, but most people can't...

And it makes me mad that these folks are at the mercy of employees at Chase – and let's be honest, most other big banks as well – who can't get their act together.

Buying a house – and getting a mortgage – shouldn't be such a hassle.

Hopefully, in time, new technology will replace a lot of the pain points of the process. I could see our data – those mountains of paperwork – being made available on a blockchain-based system, for example. It will be a lot more efficient... and much more secure.

And the different moving parts of the process – such as doing something as simple as organizing an appraisal – will be a lot smoother. Ideally, things won't fall through the cracks.

But for now, I'm guessing I'm not alone in not being able to get a mortgage on time... This experience leaves me thinking that these bottlenecks in the "supply chain" of mortgages could eventually be (part of) the pin that pops the housing bubble.

As our Stansberry NewsWire team reported on July 21, there are already some concerns about other pieces of the process...

The National Association of Home Builders' Housing Market Index, which measures homebuilder sentiment, came in at 80 in July versus 81 in June... [It] marked the lowest level for homebuilder sentiment in 11 months.

The NAHB cited "shortages of building materials, buildable lots, and skilled labor" as the key reasons for the dip in homebuilder confidence.

The dip was small – and a reading above 50 indicates the majority of builders are optimistic, so it's still all systems go. But the housing boom might be slowing just a bit.

Regardless of what happens from here, if you're interested in investing in real estate today, you ought to do your research or find someone who is an expert to help you out... We suggest checking out our colleague Dr. Steve Sjuggerud, who runs a service called True Wealth Real Estate. (If you're not familiar, you can get all the details right here.)

In the meantime, I'm closing my accounts at Chase, which my wife and I opened more than 20 years ago...

But should you do the same?

And I'm not just talking about being a customer now... I'm also talking about being a shareholder. There's an important distinction to be made here...

JPMorgan Chase (JPM) – the mother company of Chase Bank – has more than $3 trillion in assets... And the company says that it serves nearly half of all households in America with one of its wide array of financial and investment products. My business, your business, and the business of everyone we know – all combined – only represent a tiny drop in the ocean of JPMorgan's business.

I'm not naïve... Big companies can afford to alienate customers – because they have so many of them. And that brings me to another takeaway...

Does my experience mean that JPMorgan is a bad stock? Not necessarily. As Benjamin Graham, the grandfather of value investing, once said...

Although there are good and bad companies, there is no such thing as a good stock; there are only good stock prices, which come and go.

In other words... even if Chase is a terrible bank (again, that's my experience, and yours may differ), there's a certain price at which JPMorgan is still a great stock. It can be both at the same time.

Finally, I'll leave you with this...

If you're in the market for a house, remember, it's silly not to borrow money right now if you're buying.

But when there's so much demand – for money, and for the services required to tap into that capital – nothing runs smoothly. Companies that are experiencing a rush of business, like mortgage providers, are likely to provide a level of service that's even worse than usual.

But if things don't go well – if a company doesn't stick to its own deadlines, doesn't deliver as promised, and leaves you high and dry – don't just sit there...

Complain.

Just do it right – and there's a better chance you'll get your money's worth.

New 52-week highs (as of 8/9/21): Automatic Data Processing (ADP), CoreSite Realty (COR), Dropbox (DBX), Dollar General (DG), Quest Diagnostics (DGX), Alphabet (GOOGL), Cloudflare (NET), Nuveen Municipal Value Fund (NUV), ResMed (RMD), and Sea Limited (SE).

In today's mailbag, more feedback on China. Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"There aren't many, if any, courageous Economic Leaders in America, or Europe for that matter, who are as courageous as was Paul Volcker. Here was a man who knew how to 'put the brakes on.' What if we are 'getting' China wrong? What if Xi (or his advisors) know how to create growth AND how to put the brakes on?

"No one could argue that Xi has not allowed several Tech Companies to emulate Google, Amazon, Microsoft, and Apple to become top tier worldwide monster tech. With it, and complete control of the Banking System, he has built out Infrastructure, Communications, Property Management, and Manufacturing. He is building renewable Energy Resources, including Nuclear at the fastest rate in the world. And in less than five years, he has moved from one Economic Door into China to several with Shenzhen rivaling Hong Kong, when you take into account the China A shares universe. Now, within a span of Months, Xi has seemingly decimated China Markets with Regulation and Structure.

"China is moving from its 'wild west' days to a more Regulated Market, taking power back from the Elite Tech and Finance Oligarchs (Captains) of Tech, especially Social Tech. Bang! In a 'Volcker' type move, Xi is doing to China what the Developed World is trying to do but is being beaten back by their captains of Industry, now in charge of Social Media, Banking, Manufacturing, and essentially the U.S. Political Party System through Government Employees for (PAC) Hire.

"Good or Evil? Volcker saved the U.S. so we could repeat the mistake again when youth finally forgot the lesson. Maybe Xi, economically speaking, learned the lesson and is so typical of China Culture, remembers the past?

"Where are we going next? Well, like it or not, the U.S. is becoming more Socialist, in the European Model. And China is becoming more Capitalist in the Western Model. And as Technology truly becomes more pervasive, more Countries are positioning themselves to operate independently of the Dollar. While new Cultural and Economic alliances are being formed, ancient alliances are being stressed. Given the 'Transmissibility' of Technology and Populations, China and India are becoming World Leaders. The old fake news of the EU attempting to run the world by loading both the NATO and G7 organizations with an 'automatic' majority is becoming past history.

"Anyone with half a brain can read the above tea leaves and see where we are going. Throw in the necessity of Climate Change as a matter of Survival, and the Well Timed but horrible effects of the COVID World War and its consequences, even the dimmest light bulb can see the changes coming and the opportunities.

"But alas, we are not all rocket scientists, Doctors, or the world's best market analysts. Me? I think the China A Market ought not to be forgotten when forgiven. And I suspect we are lucky we have Tools like Stansberry and TradeSmith, whose leaders do not lose their way." – Stansberry Alliance member Bill B.

Good investing,

Kim Iskyan
Ashton, Maryland
August 10, 2021