A credit manager's worst nightmare - the death of Folole Muliaga
My heart goes out to the family of the late Folole Muliaga, and also to the people at Mercury Energy and its contractors, who I know will have wept many tears for Mrs Muliaga, and who, right or wrong, are being blamed for her death. The death has made headlines in media around the world, and needs to be understood.
Here's the story, in simple terms. The Muliagas had come to Auckland from Samoa, six years ago. They were living in a rented house in Mangere. Folole had been in hospital in April and was discharged on 11 May. The Herald on Sunday (3 June 2007) says that she was "fatally ill when she left hospital and not expected to live much longer." She had a ventilator to help her breathe. The family was relying on her husband's wage. Mercury Energy's power bill had an overdue amount of $168.40. The family's phone had already been disconnected, which presumably meant Mercury had been unable to contact them by phone, as they try to do before all disconnections.
On Tuesday 29 May, a contractor working on behalf of Mercury called at the house and disconnected the power. (It's easy to be wise after the event, but this case does call into question the practice of contracting out aspects of this delicate operation.) The family says that Mrs Muliaga had a tube hanging from her nose, that she begged him to leave the power on, and that the machine beeped to show that it was about to shut down for lack of power. Her 20-year-old son said that the contractor said he was just doing his job. The contractor, now on stress leave, claims not to have been made aware that she was dependant on the ventilator.
Perhaps 999 people in 1000 would have called Mercury Energy at that point. Or, if they, almost immediately, became unwell, they would have called an ambulance, or plugged in the ventilator at the neighbours. However, I can understand that a humble Samoan woman with poor English and a strong faith in God might be the one out of 1000 who would take no action. It is often very difficult for Pacific Island immigrants to adjust from village life to the complexity of living in New Zealand society.
Mrs Muliaga told her family not to call the ambulance. They did so after she passed out, about 2 hours later, by which time it was too late. She died.
It's now public knowledge that Mercury Energy has procedures in place to ensure that where it knows someone needs electricity for medical reasons, that information is recorded to ensure that the company doesn't cut off the power, even if the bill isn't paid. The Herald on Sunday article says that, "[t]he obesity-related heart and lung disease which was killing Folole Muliaga, 44, was being kept at bay by a cocktail of powerful medication - not the electricity-powered machine which helped her breathe." However, be that as it may, this was clearly a case where the power shouldn't have been cut off. And it wouldn't have been cut off, if Mercury's credit department had been told of the issue.
This appears to be a series of inexplicable, tragic, human errors, either by the contractor or Mrs Muliaga or both. It's not, as has been suggested, a cold-hearted corporate conspiracy to extract payment even if it kills people. It has been depressing to see people with a political axe to grind trying to take unfair and malicious or (at best) misguided advantage of this sad situation.
Here are three key points about the process of collecting unpaid power bills:
- It is not in the interests of a power company to cut off power so of course they try very hard not to.
- However, only in exceptional cases can power companies just give away power to people who don't pay.
- Power companies (and in fact all consumer creditors) do customers a disservice if they fail to act quickly on unpaid accounts.
1. It is against the interests of a power company to cut off power so they try very hard not to. Disconnection costs money and time and grief; it upsets and inconveniences customers; it's bad PR at the best of times (and catastrophic in this particular case); it loses the power company business, both from annoyed customers who pay the bill, then switch, and from customers who give up trying to pay at that point. Power companies make money from customers from using power; they don't want to stop them doing that. The goal of a power company credit team is to collect without having to disconnect.
2. However, only in exceptional cases can power companies simply give away power to people who don't pay. Ultimately, the threat of disconnection is the sensible and feasible way to make people put the payment of the power bill to the top of the list. Most pay when they receive the warnings. More than 95% of those who ignore the warnings and are disconnected will pay in response to disconnection.
3. Power companies are remiss if they fail to act quickly on unpaid accounts. They must make customers face up to their problems early, while they are still small enough to be manageable. Criticism of Mercury's actions "when the bill was only $162.40 in arrears" is therefore misguided. Food, rent, and power should be at the top of most people's normal "payment hierarchy." There are lots of other temptations for consumers to spend their money on. It's common to find immigrant Pacific Island families, many from villages where there is no electricity, with quite different views on the payment hierarchy. The most obvious example of this is church tithing, paying 10% of weekly income - generally more - to the church. (This usually comes ahead of everything else and a spokesperson for the Muliaga family admitted that this was the case here.) Better to make a customer face reality when the debt is a manageable $100 than when it is an unmanageable $1000.
The general public is probably unaware that every day, collection staff in all sorts of businesses deal with customers desperate to avoid the consequences of non-payment. These are difficult situations. Customers routinely claim that the impending actions of the creditor will cause death or disaster. Often the claim is exaggerated, but not always. It's not unknown for depressed debtors to kill themselves.
(Of course, when a customer attacks someone from the power company with an axe, as happened a few years ago in Timaru, it's not big news.)
For credit staff in general, this case shows how vital it is to work to communicate with and understand customers when bills aren't paid. Every time you take action, right or wrong, against a customer, it has the potential to backfire on your business and on you personally. The other lesson from this case is just how bad that harm can be, for all concerned.
Peter Hattaway - www.hattaways.com - is a director of Hattaways, specialists in credit management training and consulting. This article appeared in the New Zealand publication, MG Business (Mercantile Gazette) Volume 131/Number 5517, June 11 2007