The question is with regards to the following case – “A collection scandal at Sears, Roebuck and Company”. I have prepared the documents in my capacity as an external management consultant.
Communication strategy memo:
The employees of Sears, Roebuck and Company have been, for several years, harassing and pressurizing delinquent credit card holders. This led to violation of federal law by the company’s employees. The company urged its defaulting customers to sign reaffirmations but never filed these reaffirmations with court (as is required by law). Thus the critical issue is here is that the company is mired in a legal as well as an ethical scandal. As the debts no longer existed legally (as the credit card holders had filed for bankruptcy) the company was using unenforceable agreements to collect debts.
The implication of this for the company would be that it would be penalized with not only civil penalties but will also face criminal prosecution as it was violating the rights of its customers intentionally.
Specific recommendation for action is to immediately reduce the company’s dependence on earning income from credit cards and charge cards. By making its revenues and income less dependent on credit cards the company will no longer have to aggressively pursue bad debts in future. Another recommendation is to overhaul the culture and officially policy of the company so as to prevent it from pursuing unethical business practices in the future.
Professional business letter:
Our premium credit customers.
Dear and most valued customers,
I am writing this letter to apprise you of an issue that recently came to my knowledge but has been secretly being practiced at Sears for quite some time. The company, while aggressively pursuing its bad debts, unethically entered into reaffirmation agreements with as many as 512,000 of our customers. This piece of news was filtered from the management and as such the practice continued for several years.
The company intends to take strong and swift remedial actions. The practices, systems and culture at Sears are being overhauled to ensure that no such unethical as well as illegal practices are being conducted in future.
I would also urge all our valued customers to immediately inform the company if they feel that they are being harassed or victimized or being pressured to be a part of unethical activity in the future.
The company highly values our customers and will always keep their interest in mind when pursuing business activities. The company needs your support in these trying times and I assure you that we will come out stronger and brighter.
Mr. Arthur Martinez
(Chairman and CEO)