The hidden design failure that’s costing consumers trillions

Bad service design—from how banks handle identity fraud to how call centers handle student loans—is costing consumers, companies, and organizations trillions of dollars. Why do services still work this way?

The hidden design failure that’s costing consumers trillions
[Source Image: Macrostore/iStock]

When Jordan Haignes started to get phone calls from Citigroup about repaying a loan, he didn’t know why. He was annoyed. The bank, it seemed, thought he owed them $15,000. But Jordan hadn’t ever taken out a loan with Citigroup. After some investigation, it transpired that, like millions around the globe before him, he had been the victim of identity fraud. Someone had taken his name, address, date of birth and other information and run up a bill of thousands on a credit card in his name. He complained, why had Citigroup agreed to give this fake Jordan a credit card, and why, now that the fraud was discovered, was it his job to sort it out?


The answer lies in our fundamentally different views on what we expect from services, in contrast with our expectations of almost anything else in our lives.

Any person in the United States who is a victim of identity fraud is legally required to prove that their identity has been stolen in order to not be held liable for any damage done by that impersonator—and yet service providers don’t suffer these penalties when they fail to identify users correctly.

This is a problem that stretches across the banking services sector and beyond, and it shows that not only are the providers of services often not culpable for the failure of their service, they’re often unwittingly involved in engineering its failure themselves—whether they know it or not.

Katy Highland was one such victim of accidental service sabotage. A teacher from New Rochelle, New York, Katy took out a loan when she went to college to pay for her teaching degree. When she graduated, she soon found herself struggling to repay her loan with two small children on a teacher’s tiny salary.

She called her loan company, Naviant—one of the many organizations the U.S. government outsources loan management to—and was offered to pause the payments on her loan.

Thinking this was her only option, she paused her payments.


What Katy didn’t realize was that there was a government scheme that meant that—as a teacher—she was eligible to write off the remainder of her loan if she paid 120 consecutive payments on time. Every time she deferred her payments to Naviant, she was racking up interest and disqualifying herself from the scheme. So why, when this clearly wasn’t the best thing for her to do, was she repeatedly told to defer her payments every time she called Naviant?

As it turns out, Naviant, like many organizations, has a strict limit on the amount of time a call center operator can spend on the phone with a customer without losing their bonus. In this case, it’s seven minutes.

[Source Image: Reenya/iStock]

What with the numerous identity checks, surveys, and statutory notices that need to be made to meet company policy, that seven minutes becomes more like five—not much time to give high-quality advice to someone like Katy. In fact, almost the only thing you can do in five minutes on the phone to Navient—apart from complain—is to defer your loan. So this is what happened to Katy.

From top to bottom, everyone involved in providing this service to Katy, and the millions like her, is incentivized to provide a service that harms both individual users and society as a whole. Naviant was being incentivized by the U.S. government to provide a cheap service, not an effective one, just as each call center operator was incentivized to get Katy off the phone as quickly as possible. No one was focused on making sure that Katy could afford to keep teaching.

Individually, these can all seem like accidents, “just the way the service works.” But at some point, they were all conscious decisions that add up to a service that neither meets the needs of individual users nor the goals of the organization providing it. Someone decided to implement a seven-minute rule on the call center and keep it there, despite the length of time each person needs to spend on customer identity checks. Someone decided not to train all staff in the government scheme that would have meant that Katy could have written off her loan.

As of 2018, 44 million Americans owed a total of $1.5 trillion in student loans. About 4 million of those Americans are already in default and a large number are on their way. At the same time, the U.S. is facing an unprecedented shortage of teachers—caused, in part because of the low wages and high expectations of formal education.


These things happen because we don’t design services, we let them happen by accident. The services we use everyday, from student loans to healthcare and housing, are more likely to be the product of technological constraints, political whim, and personal taste than they are the conscious decision of an individual or organization. By not designing our services, we’re accepting that they will simply evolve to the conditions around them, regardless of whether or not that means a service meets user needs, is financially sustainable, or achieves a certain outcome.

In 1971, designer Victor Papanek wrote: ‘There are professions more harmful than industrial design, but only a few.” At the time, he was right. Industrial design was and still is responsible for the mountains of fridges filling our landfill sites, our addiction to motor transport and fossil fuels, and our love of disposable food packaging. But perhaps even Papanek couldn’t have foreseen the damage that could be done by bad services today.

The problems that bad services cause are vast—and they don’t just have a negative impact on users, but cause problems to businesses and society as a whole. Unlike the problems with the products we use though, problems with services are often hard for us to identify and even harder to attribute.

In the U.K. government, about 80% of the cost of government is spent on services. Not surprising, given it is the oldest and largest service provider in the U.K. Of the 10,000 recorded services (not all are known), some are over 200 years old, with the oldest recorded dating back to Henry VIII. What is more surprising perhaps is that up to 60% of the cost of these services is spent on service failure—phone calls asking government how to do something, or pieces of casework where forms aren’t filled in correctly.

Spending on public services amounts to roughly a third of U.K. GDP, meaning that bad service design is one of the biggest unnecessary costs to U.K. taxpayers. And yet, it’s not simply users that are paying the price for bad service design, it’s our organizations, too. We are footing the bill for the unnecessary phone calls, the returned products, complaints, or missed appointments as much as our users.

A better service for users is generally a better service for an organization to supply. So how is it that services continue to work in this way? It isn’t because we don’t want services to be better, or that we aren’t aware that they need to work for users. The answer is that services, unlike almost anything else that has an equivalent effect on our lives, have remained unrefereed and unscrutinized.


We have a collective blindness for services. They are the gaps between things, and so not only do we fail to see them, but we fail to recognize when they aren’t working. They are often provided by multiple organizations, or parts of an organization, so their cost and the negative effect they have on the world is more difficult to track than the cost of failing technology.

Service failure is hidden in wrongly worded questions, broken links, and poorly trained staff; in emails not sent, phone lines that have been closed or inaccessible PDFs. In short, it’s hidden in the small, everyday failures of our services to meet the very basic needs our users have—to be able to do the thing they set out to do.

Many of the problems with our services are not as obvious to spot as the problems with student loans or credit card sign-up in the U.S.—but they are no less impactful in our users’ lives. Each time we decide to incentivize our staff, change a policy, open or close a channel, or buy a new piece of internal technology, we make a decision that will have an impact on the quality of the service for a user. We need to turn these everyday decisions into conscious design decisions, with the full awareness of the effect they will have on the service we provide, but we can only do that if we know what we want to achieve—what a good service is and what it isn’t.

Lou Downe is a designer, writer, and director of design and service standards for the U.K. Government, and the author of Good Services (BIS Publishers, 2020).