Claro and Oi Sued for R$300 Million

By Bruno De Nicola, Contributing Reporter

RIO DE JANEIRO – After disregarding the government’s latest call center regulations on several occasions, Brazilian phone providers Claro and Oi are being taken to court. The overwhelming amount of complaints over customer relationship management has caused consumer unions from 24 states to file a law suit against the two communication giants.

If found guilty, the companies will have to pay upwards of R$300 Million each. This sum is one hundred times the maximum fine proposed in the Consumer’s Rights Code of Law.

On December 12, 2008, thanks to the consumer union Procons’s perseverance, the Brazilian government announced the so called “Call Center Act” to better regulate phone provider customer service. According to the decree, both mobile and home phone companies are forced to answer to a customer’s phone call within sixty seconds. They are also obliged to facilitate contractual closure if a client isn’t satisfied with the service. The act contains several rules defining the call center’s modus operandi, including forbidding an operator to ask a client to repeat his request.

However, since last year, little has changed and numerous clients have continued to complain about slow and tangled customer service. The phone companies have been keeping people on hold for interminable periods of time and forcing them to repeat their requests to every specialized operator they are passed to.

Ricardo Morshita, Chief of the DPDC (National Department for Consumer’s Rights), believes that phone provider customer service departments are still to hard to access, adding: “Sometimes call center operators even hang up on their clients, and not because they don’t know what else to do. They do it because it’s company policy.”

“Despite many investments in HR and IT, customer service remains a problem in the telecommunication sector,” said Minister of Justice, Tarso Genro, who explains that the dilemma is that fines for breaking the “Call Center Act” are trivial compared to trimester revenues.

Phone companies prefer to pay penalties rather than abide by the law, as government fines are too lax. In a few words, Oi/Brasil Telecom pays about R$2.5 Million annually for call center irregularities, while Claro pays about R$1.1 Million, insignificant figures for such huge corporations. Oi/Brasil Telecom, for example, earned R$734 Million in revenue from April to June of this year.

The law suit is a new record in the Brazilian telecommunications industry, and is hoped by many to serve as an example for all companies in the sector.

A look at the Procons ranking for consumer complaints, in fact, shows that the telecommunication sector leads the chart and can be held responsible for 57 percent of overall Brazilian client discontent. Second place goes to credit card companies, which at a more reasonable 18 percent.

In the home phone sector, Oi/Brasil Telecom causes 60 percent of consumer complaints, whereas Claro, in the mobile phone sector, is responsible for 37 percent. Covering the two key areas of phone spend and representing a sizable chunk of market discontent, the two companies have been chosen as poster children for what is wrong with Brazil’s phone provider customer service.