The 7 Top Reasons Customers Sue
As a business owner, you need to protect yourself from lawsuits. Such lawsuits can come from suppliers, employees, or even competitors. However, the most damaging lawsuits are typically those that come from customers. They can be expensive, and they have the potential to generate bad press – which can lead to loss of customers.
If a customer files a lawsuit, it’s usually because they are unhappy with something that could not be settled through a complaint. Most lawsuits are the result of broken promises or negligent mistakes. It’s important to understand precisely how lawsuits can occur so that you can take protective measures. Below are just a few of the most common reasons that customers sue businesses – and how to protect yourself.
Injuries/illness
From falls on wet floors to cuts from faulty products, many different injuries and illness triggers can lead to a customer suing. Such incidents must result from a company’s negligence in order for a successful lawsuit to be filed.
Strict health and safety measures are important to prevent customers from getting injured or ill. If there is no way to completely prevent the risk of injury, measures must be taken to warn customers (such as wet floor signs and ‘caution hot’ labels on takeaway cups of hot liquid).
While most of these lawsuits are due to honest negligence, you do need to be careful of fraudulent personal injury claims, too. This could include a customer claiming they fell on a wet floor. A wet floor sign may be enough to protect you, but it’s possible that you may need to go one step further and collect evidence to prove an injury was fraudulent (such as collecting CCTV footage).
Because such cases are hard to prove, insuring yourself against personal injury claims is worthwhile in most industries. It’s worth looking into specialist insurance that will protect you from the most likely injuries in your industry (such as handyman insurance if you are a plumber or medical malpractice insurance if you own a medical clinic).
Damaged/loss of property
A customer is also likely to sue if you damage or lose their property. This can include damage/loss caused by negligence (such as a moving company accidentally breaking a glass coffee table by knocking it) or damage/loss caused by disaster (such as a fire in a cloakroom burning someone’s coat).
It’s important to take great care around customer property and put protective measures in place when necessary (such as ensuring a suitcase locker room in a hotel is adequately secure to prevent theft). Insurance can financially protect you against damage to/loss of customer property if it is impossible to eliminate all risks. Some form of public liability insurance usually covers this.
Poor quality work
In most cases, if a customer is not happy with the results of your work, they will complain and potentially ask for a refund. If you refuse to compensate them or fix the problem, this is when you can typically expect a lawsuit. Of course, some poor-quality work can have such a disastrous impact that a customer may sue straight away – such as a poor-quality tattoo that cannot easily be covered up.
Such lawsuits can often be avoided through thorough training and strict quality checks. If errors continue to happen – which they often will do – it’s important to handle these promptly and professionally. Offering pre-emptive compensation can prevent a customer from complaining and suing in many cases. Ignoring or refusing to accept responsibility for a mistake will increase the likelihood of receiving a lawsuit.
Missed deadlines
Many products and services have to be delivered by an agreed deadline. If the deadline is not met, there is a high chance you could be sued – especially if the product/service needed to be delivered on that date (such as a wedding cake).
When agreeing to deadlines, it’s essential to be realistic as to what you can achieve by that date. If you are given plenty of advance warning, ensure that you get started early enough and do not get into a habit of putting off projects. If there are unexpected setbacks along the way that force you to be late, you may still be able to reduce the risk of a lawsuit by telling the customer early and helping them arrange alternative solutions if necessary.
Surprise fees
Another common reason that customers sue is having to pay fees that weren’t originally agreed on. This could include paying extra for delivery of a product that was not approved upfront or having to pay an exit fee to unsubscribe from a service when this fee was not agreed in a contract.
You can usually prevent these types of lawsuits by being transparent with all costs upfront. Deceiving customers into buying a product/service at a low price and then adding extra costs later is not an honest way to generate sales – and you could be accused of false advertising. While you can highlight certain main costs, it’s important to outline the overall cost of sometimes with an itemized list of all the fees. Some customers may still claim they weren’t told about certain costs, but you can prove to them that you were told about them by showing them the contract.
Customer discrimination
If a customer feels they were unfairly discriminated against, this could also lead to a lawsuit. This could include a customer feeling that they were rejected or overcharged based on their race or sexuality. Make sure that all customers are treated equally. Even if a customer is being rude to you, you need to make sure that they are given the same level of customer service and quality control as a polite customer paying the same price – favoritism can easily be mistaken for discrimination. On top of this, make sure to pay attention to your staff members and ensure that none of them are being discriminatory.
Data breach/loss
Accidental loss of customer data or a data breach can be very costly. This could include a photographer accidentally deleting a customer’s photos or a hacker gaining access to sensitive financial information.
Make sure to back up all customer data and put in place stringent security measures to reduce the risk of a successful cyberattack. It would be best if you also were careful as to which staff members you give certain admin controls to. Cyber insurance may help to compensate you and your customers if you are a victim of a cyberattack and customer data is stolen. This is particularly worthwhile in sectors like finance, healthcare, and data storage.
