Written by Diana Skye: Published January 10 2018.
Every company has its challenges. Whether a small business or large corporation, problems are unavoidable.What can a business control? They can control how to handle these challenges. This is particularly important when they do something wrong. If they handle a mistake incorrectly, it can quickly become a public relations disaster. Trying to hide information or making excuses just makes the situation worse. Several companies learned this the hard way. My case studies include Lime Crime, Nars, Air Transat, Sears Canada, and Microsoft.
Lime Crime’s Kerfuffles
One company that has dealt with many scandals is makeup brand Lime Crime. They have some good quality products and were one of the first companies to create a liquid lipstick. However, they have also had many failures over the years. In 2015 there was a security breach and several customers had their credit card information stolen. The hackers had access for several months. (1) It took a long time for Lime Crime to acknowledge the problem and issue an apology. Two years later they lost a class action lawsuit for failing to protect their customers. (2)
A year after the security breach, Lime Crime released new foil eyeshadow duos. Many customers who bought them noticed a suspicious substance on the shadows. (3) It was speculated to be mold, which is dangerous to the eye area. At first Lime Crime said it was just water bubbles. The claim was questioned by many. Eventually Lime Crime did stop carrying the eyeshadows, admitting there were issues with the formula. That is what they should have done from the beginning instead of making excuses. While Lime Crime has potential, they need to make improvements to customer service and transparency in regards to product and security failures.
Nars Fails to Disclose China Expansion
Nars is a luxury cosmetics brand that was cruelty-free until very recently. In June 2017 Tashina Combs, owner of the popular cruelty-free blog Logical Harmony, made a post about Nars. She said that they were expanding to China. (4) Beauty brands that sell in mainland China stores are automatically required to test on animals. (5) Nars had not officially announced this, although they did update the cruelty-free statement on their website. Many customers saw this as them trying to hide the change, hoping they would not find out. I believe that Nars should have announced their China expansion. Not everyone purchases exclusively cruelty-free. While they would still lose customers, many would still continue to purchase from them.
Air Transat Leaves Passengers Stranded
On July 31 2017 an Air Transat flight was diverted to Ottawa due to bad weather. The passengers were not allowed to get off the plane for six hours. Many later described awful conditions while being trapped. (6) It was very hot and beverages eventually ran out. It wasn’t until one passenger called 911 that they were finally allowed to get off. The airline blamed Ottawa International Airport for not finding them a gate. The airport immediately denied these claims, saying that they were not aware of the situation. While this horrendous situation should never have occurred, the least Air Transat could have done was apologize and admit their wrongdoing. Their poor response cost them dearly. After an investigation, the airline was found to be completely responsible for the incident. They had to pay a fine and a class action lawsuit is underway. (7)
Sears Canada refused to pay severance
Sears Canada has been struggling financially for years now. In 2017 they announced closures of many stores. Thousands of long-time employees would lose their jobs. Reports soon emerged that Sears would not be paying them severance. (8) They claimed that they simply could not afford it. However, senior employees would be getting large bonuses. People were very upset about this and a campaign to boycott Sears was started. Eventually Sears announced that they were creating an employee hardship fund for those denied severance. (9) In fall 2017 they announced that they were liquidating all assets and closing remaining stores. Their treatment of employees is not the only reason they went out of business, but the boycott certainly did not help. If Sears wanted any chance of saving their business, employees should have been treated fairly.
Microsoft Forces Windows 10 Upgrades
Microsoft released the Windows 10 operating system in July 2015. They announced that Windows 7 and 8 users could upgrade to the latest system for free. While this was a good idea, not everyone wanted the new system. People that did not upgrade were constantly bombarded with messages advising them to make the switch. Microsoft started to install files without informing the customers. (10) In 2016 users started to complain that their computers were automatically upgraded to Windows 10 without their consent. One customer successfully sued Microsoft for $10,000. (11) At this point they finally stopped the automatic upgrades and added options to stop receiving messages. Microsoft should have made Windows 10 completely optional. Pressuring and forcing customers to upgrade is not a good business move.
Any company will run into problems at some point. What they can control is their response. Companies like Lime Crime, Nars, Air Transat, Sears Canada, and Microsoft handled controversies very poorly. This cost them customers. In some cases they also had to pay fines or were successfully sued. Sears ended up going out of business. These companies would have dealt with less fallout if they had better responses. Being transparent and owning up to mistakes goes a long way when a business makes a mistake.
- Ilascu, Ionut. “Lime Crime Website Hacked, Over Four Months of Transactions Compromised.” Softpedia. SoftNews NET SRL, 26 Feb. 2015. Web. 8 Jan. 2018.
- Tessin, Paul. “Lime Crime Data Breach Class Action Settlement.” Top Class Actions. Top Class Actions LLC, 20 Dec. 2017. Web. 8 Jan. 2018.
- Nussbaum, Rachel. “The Lime Crime Superfoil Eyeshadows Are Creating Controversy Among Fans Of The Brand.” Bustle. Bustle Digital Group, 20 Sept. 2016. Web. 8 Jan. 2018.
- Combs, Tashina “Is Nars Cruelty Free?” Logical Harmony. Logical Harmony LLC, 25 Jun. 2017. Web. 8 Jan. 2018.
- “China – what’s the story?” Choose Cruelty-Free. ZAAAX, 31 Aug. 2017. Web. 8 Jan. 2018.
- Press, Jordan. “Passengers in hours-long Air Transat tarmac delays describe harrowing conditions.” CP24. Bell Media, 30 Aug. 2017. Web. 9 Jan. 2018.
- Marowits, Ross. “Transport watchdog, Air Transat sued over tarmac delay.” The Globe and Mail. The Globe and Mail Inc, 4 Jan. 2018. Web. 9 Jan. 2018.
- Dunn, Trevor. “Laid-off workers ‘very, very upset’ as Sears restructuring cuts off severance pay.” CBC News. CBC/Radio-Canada, 5 Jul. 2017. Web. 9 Jan. 2018.
- Strauss, Marina. “Amid outcry, Sears Canada sets up ‘hardship fund’ for laid-off employees.” The Globe and Mail. The Globe and Mail Inc, 15 Aug. 2017. Web. 9 Jan. 2018.
- McLauglin, Kevin. “The 10 Most Controversial Companies Of 2016 (So Far).” CRN. The Channel Co, 29 Jul. 2016. Web. 9 Jan. 2018.
- Dalton, Andrew. “Microsoft sued for $10,000 after unwanted Windows 10 upgrade.” Engadget. Oath Tech Network, 27 Jun. 2016. Web. 9 Jan. 2018.