Frayed Wire

Abusive relationships are hard to end, which may explain why so many customers run back again and again into the arms of companies that treat them with little respect. CMSWire.com spelled out the problem in a story last week on the risks of buying electronic devices on launch day.

In the rush to market products, manufacturers of everything from game consoles and computers to cameras and cell phones have turned loyal customers into consumer guinea pigs. And it's more insidious than you may think.

Real Time Product Research

Product testing is an important part of the modern relationship between manufacturers and consumers.

Before the latest electronic toy, high-tech gadget or home appliance hits store shelves, customers assume it's been subjected to numerous and varied starts, stops, marathon use periods, temperature extremes and demonstrations of use and abuse. Select research laboratories specialize in new product testing. Other times, companies pay small groups of consumers to test products.

Unfortunately, however, average consumers more often end up as product testers -- without disclosure and without compensation. They may even unwittingly pay to conduct research for the companies that manufacture some of the most popular products in retail stores.

The disturbing trend allows companies to get products to market quicker, without doing adequate testing. Instead, they rely on the experiences and complaints from the first consumers who buy the products.

For more than 10 years, just after the launch of the latest, greatest, expensive game console, I've had the dubious pleasure of fielding complaints from disappointed, frustrated and outraged consumers who ended up with defective products.

Many of them spent hours or even days in lines waiting to purchase limited quantities of the highly advertised products. Their enthusiasm, however, dissipates when they discover fatal flaws -- issues like freezing, overheating and general failure to operate.

Every Xbox 360 gamer can tell you about the Red Ring of Death, the three flashing red lights on the face of the console that indicate technical problems and failures that can render the consoles useless. The problems started with the product's launch in late 2005 and never abated. A 2009 survey by Game Informer estimated the failure rate was more than 50 percent.

This may be one of the best-known product defects, but hardly the only one. Each year hundreds of computer and electronic product recalls occur because of defects in computers, notebooks, video game consoles, monitors, LCD screens, power adapters, batteries … and on and on.

And over time, the problem only seems to be getting worse. As our earlier story pointed out, mandatory or essential updates were needed for a host of recently released products, including two much awaited game consoles -- Microsoft's Xbox One and Sony's PlayStation 4. In addition, some early adopters of both devices are reporting hardware problems.

Tech site IGN reported numerous Xbox One issues, including problems with disc drives, unusual sounds coming from the machine, spontaneous system shutdowns, missing pixels and blank or frozen screens. Some customers couldn't get their systems to start at all.

Microsoft sold more than one million consoles on launch day last Friday. The company claims Xbox One malfunctions are affecting "a very small number of Xbox One customers."

Sony also sold more than one million PlayStation 4 consoles on Nov. 15, launch day in North America. But some customers complained they bought "Play-lame-sions." Sony conceded problems are affecting fewer than 1 percent of customers. Will the same number be affected when the system is released in Europe on Nov. 29?

The unanswered question: How many of those units sold have even been opened? Is it fair to assume a large number of them were purchased as holiday gifts? How many more are potentially defective?

Time to Ask Questions

An optimist might presume these problems are pervasive but simple mistakes. But if you dig a little harder, you'll find they are more likely deliberate attempts to cut research costs and rush products to market.

As the law firm of Lieff Cabraser Heimann & Bernstein clearly states on its website: Defective computer products are often sold despite a manufacturer knowing or learning of defects, and without the manufacturer announcing a recall.

Microsoft only fessed up to the Xbox 360 issues after a flurry of class-action lawsuits. Did it seize on those lawsuits as opportunities to improve its pre-launch product testing? Nope. Instead it followed the lead of other major manufacturers, including Sony, and simply took away the rights of its customers to sue.

Last summer, Game Politics reported on a stipulation in the preorder terms for the new Xbox console that restricts the consumer's ability to enter into a class action lawsuit against Microsoft. Instead, it requires aggrieved buyers to use a Microsoft-dictated arbitrator to resolve disputes.

You can read the specific language right on the Xbox One product information page, which states:

You must accept Xbox Software License Terms at xbox.com/xboxone/slt, Xbox Live Terms of Use at xbox.com/legal/livetou, and Limited Warranty at xbox.com/xboxone/warranty. Terms include binding arbitration with class action waiver to resolve disputes."

The PlayStation 4 System Software License Agreement includes similar language, at least for customers living in the Americas.

Welcome to the era of binding arbitration.

Imbalance of Power

Many contracts for goods and services now contain binding mandatory arbitration provisions. Consumers are required to waive their right to sue, to participate in a class action lawsuit or to appeal. Are they fair? According to the Washington, D.C.-based National Association of Attorneys General:

Consumers are often unaware they have agreed to binding arbitration, thus depriving them of their right to make informed decisions. Binding mandatory arbitration provisions are tucked in paragraphs of fine print or provided as a separate form among many forms. Companies rarely mention or highlight the provision. If they do, it is often presented on a 'take it or leave it' basis. Binding mandatory arbitration also limits consumer options for resolving a dispute. Before a problem arises, consumers are locked into binding arbitration for future disputes or problems."

Hardly seems like a way to enhance the customer experience, does it?

The Bottom Line

There are many reasons customers ignore the potential risks to buy on launch day, from excitement at being an early adopter to a desire to get one before they sell out. Gamers who like to modify their hardware -- in spite of the legal consequences -- feel it's advantageous to get launch products. Why? Because they can more easily exploit the very bugs that may frustrate the average user.

In fairness, there will always be unforeseen issues and glitches, as well as manufacturing and design defects. Still, you have to wonder. Why do companies spend so much money advertising and marketing new products that leave us feeling disillusioned and betrayed after we buy them?

Title image by Bacho (Shutterstock).