This doesn't seem so terrible to me. You entered a contract with Zipcar where you pay them an annual fee for their services. Failing to pay the fee doesn't automatically break that contract.
Think of this way: what if you could simply stop paying rent when you want to move out of an apartment? Or you just stopped paying your cell phone bill when you want to cancel it? What if you forgot to pay your health care premium and you lost your health insurance??
Clearly these aren't acceptable ways to break out of a contract.
The author's trick to "lose" your card to prevent auto billing is inviting issues like this. It seems so much smarter to just check your credit card statement each month. That would be much less work than having to update your credit card number everywhere you do want to renew a service.
Your credit card failed processing and Zipcar kept your service up and prompted you to update the card. That seems like a great way to go. If they had simply cancelled your account, I could imagine this blog post going the other way. "I forgot to update my card and zipcar cancelled my account, leaving me stranded when I really needed a car!!"
With critical accounts like your car, apartment, cell phone... it seems best to be explicit when you want to cancel your account.
I'm a reasonably experienced consumer and until now I always would have answered "yes" if someone asked "is cancelling your credit card an acceptable way of terminating a monthly service?" I'm also a reasonably experienced seller of recurring services... and my answer would have been the same.
If I'm pre-paying a service each month and I cancel my card, getting threats about collections is the exact opposite of what I expect. What I usually expect is for the service provider to either cancel my service or put it in some kind of suspended mode and then follow up with me to see if I really meant to cancel. Good billing providers would actually do this automatically: http://chargify.com/features/dunning-management/
As an aside, half the purpose of Zipcar is that it isn't a critical account. It's an easy-to-use convenience that saves you from the complexities of owning a car or making arrangements with a traditional rental service.
It's a possible way of terminating SOME services (I wouldn't try it on your cable or cell phone bill). But I think it depends what you mean by "acceptable." It's not very nice. If the best practice for a merchant is to suspend an account when someone doesn't pay, then best practice for a consumer is to cancel a service when you no longer intend to pay for it.
I dunno, it's not really "nice" or "mean". It's an amoral act. If a user automatically prepays for services and isn't under a more formal contract (as they would be with a cell phone provider, and possibly cable), opting not to pay is their prerogative. Just as opting not to provide services is the seller's prerogative.
Monthly services fees are a convenience for both the buyer and the seller, not just the seller.
Nearly all cable services and most cell phone contracts are post-paid, not pre-paid. How else would they tack on fees for elective usages without a debit system?
It's effectively a credit system. You owe them money at the end of the month for services rendered since the last bill.
The existence of post-paid services seems to have no direct bearing on whether pre-paid services, like Zipcar, should feel entitled to rapidly go ape on your credit rating when the funding source disappears.
It does absolutely have direct bearing on whether "opting not to provide services is the seller's prerogative" as the parent stated, when the services actually are under a formal contract and post-paid. The argument holds up for Zipcar but not any of his examples.
"If the best practice for a merchant is to suspend an account when someone doesn't pay"
no it's not!!!
i prefer that my credit card stays active if i'm late. I prefer that my health care is active if my payment is late. I love that my cell phone is reachable if i miss my bill.
Stop making excuses. 99.9% of the time, i don't want the merchant to cancel services if i miss a payment.
Simply stopping payment is a bullshit way to indicate you want to stop paying for a service.
This is hacker news. Thing about building a system where you had to account for people breaking a contract every time they wanted to cancel service. That's an edge case and shouldn't be encouraged.
The question isn't whether or not it's an acceptable way of terminating an agreement, the question is how does a merchant act properly in handling such a situation.
Calling the creditors when a) the missed payment is for a pre-paid service; b) is a small amount; and c) the service hasn't been used by the customer... is completely inappropriate.
Even more inappropriate is when a merchant builds their entire business model based on a combination of infrequent auto-renewing payments, a complicated cancelation process, and crazy cancelation terms. Canceling at some gyms, for example, is more complicated and requires more effort and notice than leaving an apartment. That's sneaky (and by design).
Is it stupid to cancel your cards as a way of ending your contracts? Yes. Is it stupid to take draconian measures to get money from a customer who doesn't want and hasn't used your service? Yes.
you can make your own assumptions about acceptable ways of canceling a monthly service. you can also read the terms of service and abide by what you said ok to.
personally, it seems like a lot of people are trying to whine their way out of contracts.
> Your credit card failed processing and Zipcar kept your service up and prompted you to update the card. That seems like a great way to go.
How about threatening to send it to a collections agency? Was that a great way to go too?
I work at a company that offers a subscription service. If someone failed to re-bill and we threatened to send them to collections, most of our customers would react to such a threat in one of two ways.
1. Immediately cancel their account.
2. Quickly cancel their account, but after one of our re-billing attempts had gone through, in which case they would also demand a refund (if we are lucky) or would complain to their credit card company and we'd end up with a chargeback. Enough of the later and the banks get annoyed.
We've found in fact that a lot of people who have stopped using our service forget that they are on automatic billing. We successfully charge them, and then they cancel. We give them a full refund if they cancel reasonably soon after the renewal.
No. As I understand it, porn sites depend on recurring subscriptions that people forget to cancel. If it were overuse and undersubscription, they wouldn't be profitable.
This is true. As I said in the porn thread, I used to work at a large porn company. One time we had about 3 weeks of significant intermittent downtime, due to a really bad server migration.
I suggested that we send out an email to the subscribers offering a one-month credit if they wanted it, and the management looked at me like I was crazy. When I asked why, they explained that if we sent an email like that out, it would remind the members to cancel their subscriptions.
That was a big part of my inspiration to create the "iTunes Store for porn" application.
The apartment analogy is a very poor one for this argument, especially when one would theoretically continue living in an apartment while they stopped paying for it.
This author, Fred Stutzman, clearly stated he quit using the service sometime between "last year"(2008) and March of the following year, 2009.
I couldn't disagree more. I recently had a similar issue. If a company cares about its customers it should:
1. Email them 3-7 days prior to an auto-renewal to tell you it will be renewed if you do nothing;
2. Simply cancel the account if an auto-renewal fails emailing the customer to tell them why. Ideally it will go inactive for a period (eg 7 days) in case it's unintentional;
3. Give a no fuss refund within 7 days of an auto-renewal if the service hasn't been used in that time; and
4. Allow easy deletion of an account (not simply inactive ie it's about data retention).
Stories like this are good to publicly shame companies for putting short term interests (the money made from auto-renewal grifting) ahead of customer satisfaction, which is ultimately to their detriment.
Wow this attitude is really offensive. If I want to auto renew a contract it should be something I willfully decide to do--not something that is auto-default. Then to presume that this guy gets his credit score hurt and potentially will have trouble getting loans and a mortgage all because some company is so insecure about the value of the service it provides that it has to trick consumers into renewing?
If your service is good, people will renew automatically. Given the proliferation of online services, it is absolutely impractical for people to keep track of many dozens of expiration dates.
There should be a federal law preventing this behavior. It's dishonest and a very bad practice. Zipcar should be held liable for any damage to this lad's credit. GRRR
If I want to auto renew a contract it should be something I willfully decide to do
But in the contract, you already agreed to let them charge you every month. I don't know the wording, but it probably doesn't say "as long as this card is active". This wasn't a case, if I read correctly, of automatically renewing when he hadn't agreed to that, but of him promising to pay until he cancelled his account, and then admittedly attempting to defraud zipcar by neither paying nor canceling.
There should be a federal law preventing this behavior. It's dishonest and a very bad practice.
To be clear, do you mean the practice of agreeing to charges you have no intention of paying? ;)
I agree, though, that we desperately need contract reform. Maybe contracts which are not individually executed by at least one person on each side should be advisory only, or something. What with the uncertainty surrounding TOS, EULAs, licenses, and 20 pages of fine print, they nearly are anyway, in practice.
To be clear, I mean the practice of opting into a renewed contract automatically. If you sign up for a year, and you want to sign up for one more year automatically, the decision to opt in should be something that you willfully do--not something that is written into a contract. There is no practical way for people to manage 20 different auto renewals. If your service has value they will sign up for it without being tricked into it by some slimeball legal wording.
oh and you can write a contract to do a lot of things--doesn't mean they all should be legal.
Another good way to ensure that you keep services you absolutely need is to review your credit card/bank details and make sure you're not getting charged for any ghost recurring services.
The problem is you can only notice this after you get charged for a service you no longer want. The problem isn't noticing charges, the problem is remembering to cancel services you no longer want before you get charged. With many different subscriptions this becomes impractical.
Insurance companies often use missed payments to cancel contracts, although there are usually specific legal provisions for notification, coverage, and fees associated with late renewals.
On an unrelated note, I once had an auto-renewing contract for $2/year renew at $40. It was interesting because the $2 subscription was on a now expired credit card from one bank and the $40 subscription appeared on a different card with a different number from a different bank. The transaction was considered illegal by MasterCard.
"Failing to pay the fee doesn't automatically break that contract."
IANAL, but aren't contracts only valid if there is consideration for both parties? If they're still letting him use their cars then the contract is probably legally binding, but if they've already cut him off then he can probably argue that the contract is invalid and he doesn't have to pay off the debt.
No, because you have used their service and owe them money for that service. In the case of zipcar, if the service has not been used, or there are no outstanding charges on the account, automembership should fail gracefully. Cellphones will not cut off your account if you are late paying, but you owe the money for the time service was provided.
Furthermore, contrary to popular belief, if you sign a contract and put down a deposit for something, that doesn't give you the right to walk away from the full purchase in exchange for forfeiting your deposit.
This was discovered the hard way by people putting down deposits for to-be-built houses, who thought they could simply walk away from the full purchase if the value of the house fell between the time they put down the deposit and the time the completion was due.
Sure, I'm just pointing out that unless explicitly added to a contract, the default situation is that forfeiting the deposit does not allow you to walk away.
So in a simple agreement where you agree to do $10,000 worth of work for someone, and ask for a $2,000 deposit, the client is not allowed to just pay $2,000 and walk away even if you haven't done a single minute's worth of work on the project yet.
at the very least, it seems like it should be an option. I mean, sure, you are right that some people are probably depending on their zipcar, and would prefer to keep getting charged (and have it go to collections) than to have the account canceled... however, how long will zipcar keep the account active, really? I mean, collections on that sort of thing have got to have way less than a 50% success rate, so if they leave your account active for another month (I'm assuming zipcar is pre-paid) they aren't getting paid much for that last month. It might be better from their perspective to take an approach more like mine.
However, I think for most of us, the zipcar account isn't such a huge deal (I can always hit avis, enterprise, or get a cab if it's an emergency and I don't have friends.) I know, personally, that I'd really prefer to have my zipcar account (if I had one) terminate upon non-payment, rather than hit collections.
This is an issue I've thought a lot about; right now, my policy is to warn and then shut you off, in fact, one of the reasons I use paypal is that I can only ask you for money. I can't pull. This makes billing mistakes on my part much less of a big deal. For most of my customers, I think this is probably the right thing. But yeah, it probably would be good to allow them a choice.
But yeah, for many of us, especially for pre-paid services, the assumption is that if I stop paying you, you will just cut me off. considering how many subscriptions I have (and the difficulty of canceling some of them) I think that's quite reasonable. Hell, I periodically change my credit card number to make sure all the 'package deals' I get when I sign up for stuff I actually want from someone shady, like, say, a bank, get canceled.
I think damage to your credit score is worse than being stranded without a car. The policy seems bad from a PR perspective to me, quite apart from any notion of right and wrong. Besides, you seldom get far in business victimizing your customers.
> With critical accounts like your car, apartment, cell phone...
Well, if you're using zipcar, it's precisely because your car is not in the same category with these others. If it were in that category, you'd just buy a car.
Think of this way: what if you could simply stop paying rent when you want to move out of an apartment? Or you just stopped paying your cell phone bill when you want to cancel it? What if you forgot to pay your health care premium and you lost your health insurance??
Clearly these aren't acceptable ways to break out of a contract.
The author's trick to "lose" your card to prevent auto billing is inviting issues like this. It seems so much smarter to just check your credit card statement each month. That would be much less work than having to update your credit card number everywhere you do want to renew a service.
Your credit card failed processing and Zipcar kept your service up and prompted you to update the card. That seems like a great way to go. If they had simply cancelled your account, I could imagine this blog post going the other way. "I forgot to update my card and zipcar cancelled my account, leaving me stranded when I really needed a car!!"
With critical accounts like your car, apartment, cell phone... it seems best to be explicit when you want to cancel your account.