Ways to eke more money out of ex-customers.

2005-11-11 11:11

So, I run an ISP as a hobby. And for that, we have various services; T1 lines, things like that.

I recently discontinued one of these services, and moved another to a new provider. The resulting mistreatment has left me wondering what these people were thinking.

Exhibit 1 is McLeod USA. We were customers of these people because they were related closely to a company with whom we once had positive experiences. Our sales rep originally promised a product they didn’t sell. Various hijinx ensued, and after months, we got a largish service credit and a downgrade… Although we spent our entire time there being billed for 12 lines, despite the sales rep’s promises that we could go as low as 8. We never needed 12.

Anyway, I called recently to cancel the service. They said they would notify the relevant people. What is involved in terminating service? Well, someone has to push a button. Service cuts and terminations and setup are entirely trivial except in the cases where a physical line needs to be run. Termination doesn’t require any new wiring. There is no technical reason at all for which it should take more than an hour to do. What actually happens?

Instead, the timeline is that, several days after I call in my request, I start getting calls from someone in “customer retention”. When I call back, I am told that she is unavailable, and that no one else at the company can process my request. No one. Until she’s around, my account cannot even begin the long and arduous hike to termination. Note that we’re already a few days into my request. I leave detailed instructions including time of day. She calls back, not at the time I requested, but at a time when I am not around, and we play phone tag again. I finally reach her. She needs to confirm that I am requesting termination, waste a few minutes of my time trying to sell me other services, and so on. Then, and only then, she explains that they need a WRITTEN AUTHORIZATION. Why was I not told about this when I first called? Because they want me on their service, which costs real money, as long as possible. I finally get the paperwork and fax it in and so on. But, of course, she explains that it takes 30 to 45 business days to terminate service.

Gone are the days when you get billed for a full 30 days of service when you cancel; now we’re up to 45 [b]business[/b] days. That’s 9 weeks. 63 days. Maybe. They can’t say. They insist that this is totally normal and that no one would ever be able to turn off a service more quickly than that.

I haven’t seen my final bill, so I don’t know what they’re really charging me for. It could be about $1,000 more than I owe them under any theory that makes any kind of sense.

Exhibit 2 is Vector Internet. They’re a largish local ISP. About four and a half years ago, we got a fractional T1 through them, on a “two year contract”. Multi-year service commitments are a traditional component of the industry; the marginal cost of setup is high, so they waive it and give you lower rates if you commit to longer service. Of course, they also give you a discount because they know their costs will drop.

I was recently talking with them about upgrading to a larger portion of a T1, but someone else made me a better offer. So, I went with that, and cancelled. At this point, Vector informs me that they will, of course, charge me $940 for the remainder of my two-year contract.

WTF?

Well, it turns out that, contrary to every other contract I’ve ever seen, Vector’s “multi-year” contract [b]automatically renews for the same term[/b]. So, rather than being two years and five months out of the commitment, I’m 19 months away from the end, and they are charging me 20% of the cost of 19 months of service at a price that is already roughly twice what they would charge with new service. (To put this in full perspective, if I’d upgraded my service to twice the bandwidth we used to have on a two-year contract and cancelled INSTANTLY, it would have cost only $170 more!)

Now, we’d been customers of Vector Internet since sometime in 1997, and we spent several years paying them $500/month for even less service than that, and we went four and a half years or so on a two-year contract. Some companies might figure they’d already had a long and profitable relationship, and there’s no point in burning bridges, but Vector are bound and determined to get their $940.

So, well. It’s not as if it’d be cost-effective to litigate this, even if I thought I’d win. 2001 was before I’d learned to compare the fine print on the contract with what the guy on the phone says. All I can do (and I did it) is move my DSL service away from them. But they managed to go, in one simple email, from “my default recommendation for internet service in the Twin Cities” to “stay away, they’re mean”.

Exhibit 3 is Direct Merchants Bank. I applied for “store” credit at Apple once, and ended up with a DMB credit card. Yesterday, they decided that they were going to spam every customer they could find. They didn’t use any address I ever gave them; they used my secret apple-only address that they were not necessarily even supposed to have access to. When I called them, they said “well, we let you opt out, so if you haven’t opted out already, obviously it’s your own fault; shut up and eat your spam”. (Not in those exact words.) So I said I wanted to cancel. Enter their new argument: If you cancel, we may change terms on your account at will because it’s “non-negotiable”. Whatever that means. So I have to pay the whole balance off immediately. Well, no problem, was gonna anyway. They do win a prize for repeated incomprehension or lies; I really can’t tell which. Every time I said “no, what I want is for you to admit that you spammed me”, they said “we can do that. We can take your name off the list”. Idiots.

BTW, one other side note: My new upstream ISP is IpHouse. They’re yet another local ISP. They are offering full T1s to many people for $200/month, which is pretty good. Also, when I moved my DSL from Vector to IpHouse, I went from 1.5Mbps to 7Mbps. My complaint, singular, about the service is that when I asked for a number at which to contact Qwest about a line problem, I received two identical responses from different support staff in under 5 minutes. Insofar as there’s a complaint, I guess that was extra email.

Friendly, competent… What’s not to like?

Peter Seebach

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Comments

  1. Sadly, I've seen the "auto-renew" clause in several different telecom contracts (one from MCI, the other from XO). It makes absolutely no sense from a business perspective: all it is is a game of "gotcha" they can play with inattentive customers.

    Sort of the way some credit cards require payment by 4 AM on the due date, making the real due date the day before.

    My solution is simple and elegant: when I sign a contract with an auto-renew clause, I also attach a cancellation letter indicating that we cancel the contract effective on the last day of the initial term. I'm sure the cancellation letter gets promptly lost in the bowels of the contracting department, but that doesn't matter. The fact that I included it means they can't auto-renew the contract and bind me for another year.

    Shivering Timbers · 2005-11-11 21:09 · #

 
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