MagicJack forced to rethink its customer service

MagicJack, maker of the small voice-over IP device made popular by late-night infomercials, today reached a settlement with Florida’s attorney general over allegations that it charged customers for long-distance calling during its advertised 30-day free trial. Without admitting guilt, the company agreed to make changes to its tech support and reimburse the state the $125,000 the investigation cost.

The investigation into MagicJack began last summer when the onslaught of customer complaints reached Florida attorney general, Bill McCollum. According to his office, the investigation found that the company did not properly disclose the VoIP device’s limitations nor did it have enough customer service representatives on hand to deal with the issues with it. MagicJack CEO Dan Borislow said that the company has resolved 500 customer complaints since the investigation began.

As part of the settlement, MagicJack to institute new customer service practices, including a guarantee that all inquiries will be responded to within 24 business hours and a disclaimer on its Web site to clarify the requirements for a free trial.

MagicJack came on to the scene in 2007, promising prices as low as $19.95 a year through an unlimited voice-over IP service. Since then, consumers have developed an acute love-hate relationship with the company – some just plain hate it, others will defend it to the grave and still others love the service, but just hate the customer service. The company has clearly been successful, selling two million devices in the first 11 months of business, but it also has shown that cheap service can’t justify inadequate customer service.

In the past, Borislow has stood by MagicJack’s customer service methodology, which relies only on online, live chat with service techs. His view is that approaching customer service online is the wave of the future. It makes sense in the respect that a tech can immediately know if the person has high-speed Internet or if their computer is working. Last May, he responded to customer criticisms on Telephony:

“MagicJack customer service on a relative basis is amazing already, but certainly not my best work product yet. Where else in this business can you wait just 4 seconds to get help and then have an escalation process to a super rep within minutes (soon to be seconds)?”

Granted, this was nearly a year ago, and the company has been improving its customer service since, but today’s settlement reaffirms that chat can be great for customer service, but if it is not flawless, it shouldn’t be the only method. Borislow also pointed out at the time that consumers are more likely to be honest in their criticism online than over the phone. It’s just a different story when their criticism is about the online chat in the first place.

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