Many Consumers Finding That Bigger May Not Be Better

The day after the announcement Monday of the proposed merger of telecommunications giants MCI WorldCom and Sprint, Federal Communications Commission Chairman William Kennard expressed grave reservations.

“Competition has produced a price war in the long-distance market,” Kennard said. “This merger appears to be a surrender. How can this be good for consumers? The parties will bear a heavy burden to show how consumers would be better off.”

So, it seems, federal regulators might repeat their 1997 rejection of the Staples-Office Depot merger as anti-competitive.

In fact, there is a great deal that is alarming about huge mergers that reduce the number of competitors in major fields and often, it turns out, subject consumers to unsettling changes and lousy treatment.

I’ve received numerous unhappy calls and e-mails reacting to columns on MCI, the Washington Mutual thrifts and Rite Aid drug stores. All have been suffering merger blues.

As MCI has grown through a merger with WorldCom, some customers have become less pleased with it. They say it already is not particularly consumer-friendly.

A number of readers report the experience of having MCI give them a good calling plan featuring inexpensive phoning, then later changing it without notice, raising the rates.

Nearly every time customers call in, or quit MCI altogether, they say they are offered a return to cheap calling plans. But this process quickly becomes annoying.

MCI insists it hasn’t raised rates without notice, but many of its customers insist otherwise.

There also have been persistent complaints that when something goes wrong with MCI bills--maybe someone appropriating a line and charging to it calls abroad--MCI makes it very complicated to get the charges dropped.

I’ve received many more complaints about fast-growing MCI than its leading competitors, AT&T; and Sprint. More regulatory attention seems required.

Recently, columns about Rite Aid, which acquired hundreds of Thrifty-PayLess stores in 1996, and Washington Mutual, which took over American Savings in 1996, Great Western in 1997 and Home Savings in 1998, have brought in surges of complaints--more than 200 on Rite Aid, more than 100 on Washington Mutual.

They have been all over the map, and it is clear that some customers used to dealing over many years with their old companies are resentful of almost any change.

But it is also clear that both Rite Aid and Washington Mutual have had great adjustment and customer service problems in handling large numbers of new outlets.

The tone of complaints against Rite Aid has been acidic, and numerous Rite Aid employees have called with word of labor problems and pharmacy irregularities. By contrast, no Washington Mutual employees have contacted me.

Also, Rite Aid has been in regulatory trouble in at least four states--California, Oregon, Washington and Florida. Florida recently accused the company of fraudulently overcharging customers, which Rite Aid emphatically denied.

No such regulatory problems have come to my attention regarding Washington Mutual. But it has many dissatisfied customers.

Rite Aid is now selling 38 of its California stores to Longs, and fairly barren shelves in some stores may indicate financial problems.

Sometimes, Rite Aid does seem to go out of the way to do the right thing. Recently, when buying razor blades at a Rite Aid store in Sherman Oaks, I found it charging more than its posted price on the shelf. When I mentioned this, and it was confirmed, the clerk gave me the blades free. This is a policy carried over from Thrifty.

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Since my column on Washington Mutual’s mishandling of a Southern California woman’s account ran just last week, I have received quite a few of e-mails reacting to it. They, too, show that mergers can be tough.

Some have to do with general frustrations. For instance, David Maislen, a longtime Great Western customer at its Fullerton branch, said he moved to Union Bank of California after three misadventures with Washington Mutual when it took over the branch.

“The first thing they did was take away free travelers checks, which I had been getting since I opened the account,” Maislen related. “I felt that was minor, so I didn’t pay a lot of attention to it.

“Then they changed my account number, making about $200 worth of printed laser checks worthless. They felt that they were not responsible for any costs involved since ‘I could use the old checks until the end of 1999.’ ”

Washington Mutual says it gave customers 21 months to change checks, and thinks that is sufficient.

But what sent Maislen on his way was when Washington Mutual put a hold on a check written on his money market account, when he was writing a check on his checking account the same day.

He had been escaping holds in such circumstances for 19 years. “That was the end,” Maislen wrote. “If they were going to treat me just like the deadbeats they were trying to protect themselves from, I would find another bank.”

Last week, I wrote about the experience of Teri Foster, who had $4,500 mysteriously removed from her account at Washington Mutual’s Port Hueneme branch, and experienced 19 days of frustration in getting it restored.

What amazed me, however, is that so many other Washington Mutual customers--close to 20--wrote or telephoned about similar experiences of losing money from their accounts. Some said they had given up trying to retrieve it.

Discussions with Washington Mutual officials Mike Amato and Tim McGarry indicated that the thrift wants to serve its customers better. But in the meantime, it seems to have bitten off more than it can chew with all its takeovers.

Such events need regulatory scrutiny. It’s not the first time we find we can’t do without the government watching out to try to prevent excesses. This goes back to Theodore Roosevelt.

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Ken Reich can be contacted with your accounts of true consumer adventures at (213) 237-7060, or by e-mail at ken.reich@latimes.com.