It all comes down to four words: No material financial impact. Let me explain.
If you want to know why Gotcha Capitalism persists so stubbornly in America — that is, corporations surviving on their ability to trick consumers — I can explain it to you in four words: No material financial impact.
Recently, 45 state attorneys general thought enough about complaints filed against satellite radio firm Sirius XM that they bothered to initiate legal action against the firm.
Plenty of customers (myself included) complained that they were surprised by credit card charges from the firm, which engaged in the old automatic renewal game.
When Sirius decided to settle, it paid some spare change for its trouble. How little spare change? When asked by a consumer reporter (me) for a statement about the settlement, the firm was quick to stress how little it was.
“We agreed to make a payment of approximately $4 million to the states that has no material financial effect on the company,” the firm said in its statement.
Yes, I know that’s specific language intended for Wall Street. The payment won’t affect earnings guidance, etc. etc.
But how can an intelligent person also not read that as a thumb to the nose (being polite here) at 45 states’ top legal authority? Sure, you came after us, and we paid, but it didn’t hurt. Nah Nah Nah. You can’t hurt me!
How can it not feel like a Bronx cheer to you?
A little more background about the allegations against Sirius: Here’s what Ohio Attorney General Mike DeWine said consumers complained about when he announced the settlement:
Difficulty canceling contracts; cancellation requests that were not honored; misrepresentations that the consumer’s Sirius XM service would be canceled and not renewed; contracts that were automatically renewed without consumers’ notice or consent; unauthorized fees; higher, unanticipated rates after a low introductory rate; and Sirius XM failing to provide timely refunds.
That list might sound bad, but I’ll bet it also sounds awfully familiar. Plenty of companies make it incredibly easy to sign up and incredibly hard to stop paying them money. And why not? They know that their worst-case scenario is usually announcing a settlement that has no material impact.