Tag Archives: dishonest_sales_practices

Ethical Selling: American Express Offers a Teachable Moment

“Every ethics question a business person could face comes down to a question you face on your very first sale: what are you willing to do for a buck?”, Philip Broughton wrote in his book, Mastering the Art of the Sale.

The question needs to be asked at every company. From the mom-and-pop Custom Cupcakes by Diane, to this week’s ethical letdown, financial behemoth American Express. The Wall Street Journal reported ongoing sales chicanery at the company, and traced its roots back to 2004 (American Express Gave Small Business Customers One Rate, Then Secretly Raised It), July 31, 2018).

Perhaps it began even earlier. AmEx reaped the benefits through 2018 – around the time Wells Fargo was accused of the same distortion. When it was publicly called out, an AmEx manager got nervous, and “told salespeople they would need his approval before offering prospective clients a margin of less than 0.70 of a percentage point, according to an email reviewed by the Journal. Current and former employees said the price changes were common knowledge within the forex business . . . Amex’s foreign-exchange international payments department routinely increased conversion rates without notifying customers in a bid to boost revenue and employee commissions,”  Journal reporter AnnaMaria Andriotis wrote in the article.

AmEx spokeswoman Marina Norville, responded, saying, “We constantly reinforce the importance of acting in the best interest of our customers.”

Current and former AmEx employees voiced a different take. They “describe an environment focused on bringing in as many new clients as possible and squeezing revenue out of them before they depart. Employees were told that the average forex [foreign exchange] customer did business with AmEx for around three years. ‘Who cares if they come or go? Let’s make money while we have them,’ one current employee said, referring to the attitude within the division,” according to the Journal.

Well, Amex, which is it? – because it’s not both.

The article describes AmEx’s tactics: “The salespeople didn’t inform customers that the margin, a markup that AmEx tacks on to the base currency exchange rate, was subject to increase without notice,” current and former employees were quoted as saying in the article. “Some time later, salespeople would increase the margin without informing the customers . . . Managers directed salespeople to keep the details of the payment arrangements hazy when speaking with potential customers and to avoid putting pricing terms in emails,” according to current and former employees.

This reveal got me wondering: how does this American Express division recruit salespeople? How do their online solicitations represent their selling culture and expectations?

This June, 2018 post for FXIP Manager popped up first in my search:

“FX International Payments (FXIP) is a cross-border payments solution developed to meet the foreign currency payment needs of small to mid-size corporate and financial institution clients. www.americanexpress.com/fxip.

The FXIP Manager reports to the Director FXIP Americas and is responsible for managing a portfolio of existing corporate clients. He/she will develop and maintain relationships, drive expansion sales of new product solutions, and make outbound calls to encourage transaction activity. The incumbent is responsible for achieving client revenue targets and overseeing the effective management across the end-to-end client life cycle, including, early engagement, loyalty and retention. He or She will work closely with colleagues in sales, marketing and operations to deliver superior service to our clients. This role includes a broad range of responsibilities, including: business development, relationship management, portfolio analysis, and requires interaction with both internal and external partners. This position will own and drive work streams and strategic initiatives to increase overall portfolio performance.

The candidate will have demonstrated success in proactively driving organic growth, client retention, revenue obtainment and related metrics in a foreign exchange environment focused on profitable expansion in a time-sensitive, well defined compliance and risk conscious environment.

Following this description, AmEx lists desired qualifications – eleven of them. Usual stuff: demonstrated experience in . . . strong knowledge . . . high proficiency . . .

Then, this one, halfway down the list:

“Must understand the individual and group responsibilities impact to department profit and revenue targets,”

And this,

“Demonstrated strong negotiation and influencing skills in order to handle objections [to] convert and activate prospects.”

Except for “deliver superior service to our clients” in the job description, this is a Revenue Focused job with a capital R, and a capital F, not unlike most sales positions. But this posting hints at the AmEx sales culture:

Drive organic growth . . . profitable expansion . . . revenue obtainment [sic] . . . Impact to department profit and revenue targets . . . Strong negotiation . . . influencing . . . handle objections . . . convert and activate . . .

Make no mistake: this is a high-pressure selling environment. If you like serving customers and relish a pat on the back for doing so, AmEx might not be the place for you. Unless, of course, you’re making goal.

What are you willing to do for a buck? And, what aren’t you willing to do? Two straightforward questions with complex answers that might vary, depending on a company’s momentary situation. Or, the sale rep’s.

This case offers a teachable moment for sales managers and salespeople to engage in conversations, and to answer further questions:

  1. Which conflicts of interest exist between AmEx and its customers? Do the same conflicts occur in our sales engagements?
  2. How might the conflicts be mitigated?
  3. Is intentional omission of facts during the sales process equivalent to lying?
  4. In the AmEx scenario, who is responsible for misleading customers? Management? Salespeople?
  5. Is it justifiable for salespeople to execute management requests, even if they perceive those requests are morally or ethically wrong?
  6. How would you resolve a conflict of interest if it happened with one of your customers?
  7. How should companies balance achieving revenue targets, and preserving the best interests of customers?

“This ought to be a moment when people stop and remember how dangerous the system is when you don’t have the proper protections in place . . . This is a wake-up call. It should remind all of us and firms that culture and compensation make a difference . . . How you reward people, how you motivate people and what values you hold people to matter,” former US Treasury Secretary Jack Lew said. He was talking about Wells Fargo.

No company is immune to the corrosive impact of dishonest and unethical sales practices. If you’re not already discussing the issues, the time to start is now.

Announcing the Winners of the 2013 Sales Ethics Hall of Shame!

“Do the right thing. It will gratify some people and astonish the rest.” – Mark Twain

Passion, focus, and relentless tenacity—table stakes for achieving any revenue goal. “Team! Let’s take that mountain!” At this point, things get complicated. For some organizations, doing the right thing doesn’t have a fitful place in the tactical mix. “Ethics? What’s that?” A few enterprises, like these award winners, lose their way. Others discover that the scramble toward the revenue summit traverses a slippery ethical slope.

Candidate companies for my 2013 Sales Ethics Hall of Shame had to clear three exacting hurdles. First, the primary purpose of the enterprise couldn’t be illegal, like human trafficking or selling crystal meth. Second, more than one employee had to be involved in unethical activity. And third, any chicanery had to be repeatable and scalable—in other words, embedded in the company’s business process.

The 2013 winners passed another demanding threshold, one that no formulaic analysis can expose. The company’s practices had to bury the ethics needle all the way into Eeeeeeewwwwwwwwwwww!, and keep it there. Not easy to do, but as you’ll read in these vignettes, these four inductees have what it takes—and more.

Dun & Bradstreet Credibility Corporation. First, needlessly frighten prospects. Then, close! Close! Close! Imagine you’re sitting at your desk and the phone rings. You answer, and the caller from Dun & Bradstreet Credibility tells you that your company’s credit status has changed to “high risk,” and that your poor credit score could deter lenders, suppliers, and clients. The salesperson pitches you to buy a credit-management service, CreditBuilder, from his company to rectify the problem. What do you do? Until the call, you had no idea.

According to a June, 2013 Wall Street Journal article, Krista Bradford, owner of a small company, The Good Search LLC, spent almost $1,000 on the service, but now believes she was misled. Her “excellent and extensive” credit was always paid on time, and once she signed up for CreditBuilder, her credit rating changed, “as if someone had simply flipped a switch,” she said in an interview.

She’s not alone. More than a dozen other business owners revealed to The Wall Street Journal that they had been misled by the same pitch. “These business owners raised questions about whether Dun & Bradstreet Credibility, a three-year-old company . . . is unfairly preying on their anxieties, in order to sell its credit-management program. Credibility’s sales pitch is particularly worrisome, some say, because of its close relationship with its former parent, Dun & Bradstreet Corp.” A former company employee shared that the telesales script provided to staff prompted them to say that based on a lack of credit information for the prospect, “it looks like you may be a failing business,” and then to recommend CreditBuilder as a solution.

Pilot Flying J. When customer rebates are withheld, profits and sales commissions grow. After the FBI raided Pilot Flying J’s Knoxville, Tennessee corporate headquarters in April, 2013, their investigation produced an affidavit that asserted Pilot employees discussed “a new internal Pilot two-tiered pricing structure that would impose higher prices on less sophisticated customers.” The FBI’s 120-page affidavit was “filled with detailed allegations of how Pilot’s sales team deliberately withheld rebates to boost profits and sales commissions,” according to a Wall Street Journal article, Pilot Truck-Stop Chief Pleads: Don’t Sue Us.

Pilot CEO Jimmy Haslam III, who also owns the Cleveland Browns football team, pleaded ignorance, saying he didn’t know about the internal practices that led to the FBI’s fraud investigation. “I was absolutely not aware of any of this,” he said. The FBI alleges that 250 of Pilot’s 5,000 customers were not reimbursed for earned rebates. Now Mr. Haslam acknowledges that his biggest job is rebuilding customer trust. “We hope you’ll continue to do business with us,” he told an audience of mainly trucker customers. “I hope you’ll give us a second chance.”

US Coachways – If your customers consistently berate your service, you can always get a good online review from your employees, friends, and probably your mom—if you ask nicely. US Coachways operates a charter bus service in New York State. But if you want to hire the company to provide transportation for your group, you might have second thoughts. “This company basically ruined what was otherwise a great trip,” wrote one reviewer, who was quoted in a New York Times article last month. The article continues, “Currently, the company has fourteen reviews averaging one star. It is not possible to get much lower than this.”

Sensing the revenue at risk from these negative reviews, Edward Telmany, the company’s CEO, took matters into his own hands. “We get bashed online,” he wrote to his employees in 2011. “We are loosing [sic] money from this.” But instead of improving service, Telmany’s solution was to hire writers to post fake reviews. He even required his employees to post comments on Yelp. One review gave a five-star rating that began, “US Coachways does a great job!” The “reviewer”? Edward Telmany. According to the Times article, “the company agreed to pay $75,000 in fines and stop writing fake reviews.”

Star Scientific. When you don’t have a GL account called Favors to Politicians, just put the expenses in Sales, General, and Administrative. Jonnie Williams, CEO of Star Scientific Inc., a Virginia-based nutritional supplements manufacturer, “contributed $108,448 in corporate jet travel to [Virginia governor Bob] McDonnell’s gubernatorial campaign and political action committee. Williams became even more generous with personal gifts or loans to the McDonnell family that topped $145,000, including five-figure checks to two daughters for their weddings and a $6,500 Rolex watch engraved for the “71st Governor of Virginia,” according to an article in the Richmond Times Dispatch. When the governor’s wife, Maureen McDonnell, flew to New York City to do some shopping, she picked up a $10,000 suede jacket, two pairs of designer shoes, a Louis Vuitton leather handbag, and a designer dress—all on Williams’ tab.

“I admire people who are entrepreneurial, who are finding ways to create opportunities in Virginia . . .” McDonnell said of Williams at the height of their bromance. But Williams’ largesse didn’t come purely from generosity. The Richmond Times Dispatch article reported that “Star Scientific representatives were lobbying senior McDonnell administration officials to include the company’s anti-inflammatory supplement, Anatabloc, in every state employee’s basic health benefits package. The request was denied, and a review by Democratic former Attorney General Anthony Troy found no evidence that either Williams or the company received any benefit, appointment, or other special treatment from state government during McDonnell’s term.”

Still, that leaves people pondering the business relationship—or friendship, if you work in the governor’s office—that has spawned a federal criminal investigation. This past July, McDonnell publicly apologized for accepting gifts from Williams. Once a possible Republican presidential contender, McDonnell has fallen from grace. Rich Galen, a McDonnell spokesman, is bitter. “Apparently, the US government has given Star Scientific a free pass for unspecified misdeeds in return for the testimony of Jonnie Williams.”

“Be a trusted advisor!” “Deliver outstanding customer experience!” “Sales is all about providing value and exceeding customer expectations!”—customer-centric bromides that rattle around the blogosphere. But to a shady executive, they are utterly meaningless. So while most everyone nods and agrees that bad ethics are bad for business, Twain’s point still hits home.

I wonder which companies will be inducted in 2014?