Customer Service: From Bloomberg BusinessWeek

Because the Customer Is NOT Always Right!

Restaurant-goers can Yelp (YELP) about high prices and bad service; homeowners can carp about shoddy contractors on Angie’s List (ANGI); ripped-off customers can tattle to the Better Business Bureau.

Now small business owners have a place to share opinions of their own: BadConsumers.com. The site’s tagline: “Because the customer is NOT always right!”

“Everything’s geared for the consumers and their protection. What about us?” asks Peter Robideau, 48, the site’s founder and owner of TeleTechie, a Malverne (N.Y.) technology support company that employs eight and brings in about $1 million annually. Robideau, a database programmer who started the company in 2004, has long traded gripes with fellow entrepreneurs about customers who haggle on prices after agreeing to them, stop payment on valid invoices, or don’t ever pay.

He had for some time wanted to find a way for small business owners to share the bad customer lists that many of them keep internally. “I have 7,000 customers on Long Island, and most of them are great,” Robideau says. “But there are a handful out there who are repeat offenders, and they only do it to small businesses because they know you don’t have a room full of lawyers to sue them. They make you wonder why you’re in business in the first place.” Most problem customers are not reneging on payments because they’re poor, he says: “It’s not that they can’t afford to pay you. They’re like rich kleptomaniacs.”

Robideau built the BadConsumers database and had a friend design the front end; he’s invested about $5,000 in the project. The site, which went live in early September, is offering free six-month memberships to business owners nationwide who submit valid tax ID numbers. Robideau says almost 500 people have become members and figures he’ll eventually charge around $100 for annual memberships. He envisions the site as protection for entrepreneurs: the electronic equivalent of the bounced checks that retailers post at cash registers.

Bad debt is a pervasive problem for small businesses, and it’s maddeningly difficult to solve. In a Citibank (C)survey of 750 small business owners released in September, 30 percent identified slow or delinquent receivables and bankruptcies as their greatest cash-flow management challenge. Nearly one-quarter blamed late or nonpayments for sudden cash crunches during the past year and said making a collection call was “the most uncomfortable business finance challenge,” second only to reducing staff.

Credit bureaus sell reports that can identify consumer credit risks, but many small businesses cannot afford them or do not consider them worthwhile for jobs that run a few hundred dollars, says Gene Fairbrother, president of MBA Consulting in Dallas. Companies cannot write off bad debt unless it’s for something they’ve actually spent money on, such as labor or materials, he says.

So the contractor who told Robideau that a customer paid $14,500 of an agreed-upon $15,000 bathroom remodel, “because Oprah said never to pay a contractor the full amount,” is out of luck—and his anticipated profit margin—unless he goes through the time-consuming, costly process of taking her to small claims court or putting a lien on her property.

Consumer protection groups aren’t enthusiastic about Robideau’s site. “A bad customers list is a bad idea,” says BBB spokeswoman Katherine Hutt, who called it “a public shaming device” in an e-mail. “We get that some customers are hard to deal with. We handle about a million complaints a year, and we see plenty of cases where the customer is unreasonable in their demands.” Still, she says, a site like BadConsumers could backfire on its members with negative publicity, especially through social media.

Encino (Calif.)-based attorney Stephen Dem, who specializes in debt-collection issues, worries that people who learn they are being bad-mouthed on Robideau’s site will take him to court. “I find great liability in that; it’s a very risky thing,” he says.

Robideau says his attorneys have assured him that speech on his site is protected, just as the complaints about business owners and their employees are protected on online review sites. Complaints will not be visible to nonmembers. Robideau has privacy and posting guidelines that prohibit profanity and racial slurs, and he says every post will be moderated.

Going forward, he hopes to offer a third-party arbitration process that will help members resolve their conflicts. For now, he’s providing a place for entrepreneurs to commiserate. “It’s about time,” he says.

Klein is a Los Angeles-based writer who covers entrepreneurship and small-business issues.