Kirby Company - Criticism of Marketing and Sales Practices

Criticism of Marketing and Sales Practices

The practices of some of Kirby's independent distributors have been subject to criticism. The Kirby is included by Lon Fuller and Melvin Eisenberg, Professors of Contract Law at Harvard Law School and UC Berkeley School of Law/Columbia Law School, as a textbook example of unconscionability. Kirby has been subject to relentless criticism by consumer protection agencies. As of 1999, of the 22 state consumer protection agencies, 15 had received a total of more than 600 complaints in just a few years. Between 1996 and 1999, the Wisconsin Department of Agriculture, Trade and Consumer Protection received 50 complaints regarding Kirby dealers, and concluded from its investigation that Kirby, through its distributors, engaged in a "statewide pattern of trade practices" violation of state consumer-protection laws.

Many of the complaints involve "older customers who lack the will to stand up to grueling sales pitches." The Wall Street Journal records examples where an elderly couple was unable to remove three Kirby salesmen from their home for over five hours; in another example, a disabled woman who had been living alone in a mobile home on $1000/month in Social Security payments and suffering from Alzheimers was discovered to own two Kirby vacuum cleaners, having paid $1,700 for the second one. In 2002, the Florida Agriculture and Consumer Services Commissioner obtained $13,000 in refunds for 13 senior citizens.

According to the Wall Street Journal, the device "costs more than four times what other top-of-the-line vacuum cleaners do." Kirby compares the price difference to that between luxury and economy cars, yet "luxury-car dealers don't make house calls in trailer parks. But Kirby dealers do." The Kirby vacuum cleaner is "marketed exclusively door-to-door—often to people who can ill afford a $1,500 gadget, but succumb to the sales pitch nonetheless."

In 2001, the West Virginia Attorney General obtained more than $26,000 in refunds and credits for dissatisfied Kirby buyers. In 2002, ABC's Primetime conducted a hidden-camera investigation in response to more than a thousand complaints regarding Kirby's salespeople. In June 2004, the Arizona Attorney General filed suit against Kirby distributors for violations of the Consumer Fraud Act, seeking an injunction against any other home sales. Public authorities flooded with complaints about Kirby vacuum cleaners is not a recent phenomenon; even in the 1960s and 1970s, Kirby had been "cited by various agencies a number of times" and the Detroit Better Business bureau had received so many complaints that it decided to turn the matter over to the Wayne County prosecutor.

Kirby attempts to disclaim liability for its sales force, whom it holds out as independent contractors. Its "Distributor Code of Ethics" enumerates 12 principles, including "observe the highest standards of character, honesty and integrity in dealings with my customers, fellow Distributors and other members of the Kirby profession." Kirby also teaches its distributors direct-sales laws, and requires them to resolve complaints within 24 hours under threat of termination.