Comment by midnightmonster | Hacker News Reader

Comment by midnightmonster | Hacker News Reader

midnightmonster

I saved a client tens of thousands of dollars per year by not making a small change.

The client had just had a customer service issue where one of their customers discovered many months later that her card was still being charged for her subscription even though the card had expired. She didn't know that many cards continue to work after they expire, and had never bothered to cancel her account.

So the client wanted me to make sure that we don't charge expired cards in the future. As far as I knew, this was the first time the issue had come up in the more than a year since we switched payment gateways, so I generated some new reports, and it turns out they had charged almost $4,000 to expired cards just in the previous month. Some of those customers would correct their card data if we notified them, but the reality of subscription businesses is that there's a lot of inertia involved. It's safe to say that the client would simply lose a fair portion of those dollars every month if we stopped charging expired cards with active subscriptions. Much better to refund the one customer/year who complains that they thought an expired card meant they unsubscribed than to forgo all that revenue. Of course they agreed and we didn't make the change.

FTR, this is the same client that a few months ago was complaining that I was the only programmer they'd ever worked with who bills them for email and phone conversations. I'll be reminding them of this case if it ever comes up again.

I sincerely hope that its a service where the customers actually want their subscription to keep running.

Otherwise... A guy that entices his customers to rip-off their customers. Plus he charges for emails written and phone calls made. You make me proud actually you'd make a fine CEMEA CEO!

I'm a little surprised at the reaction here.

It's a service--like most other consumer subscription services--where if customers have to take action to keep their subscription going, you're more likely to lose those customers than if they only have to take action if they want to cancel.

My belief is that (1) when people's cards expire, many people don't bother to update their card information in every single place they have a subscription and (2) most people who want to cancel will actually cancel and not just count on their card's expiration date to do it for them. Since we've had just one complaint in more than a year (on the order of 0.1% of number of charges we've made on past-expiration cards), I think my beliefs are justified.

And charging for time spent writing email to or for a client and consulting on the phone sounds scummy to you?

Well like I said... If your customers are seeing it as a service, then it is fine. However I also believe that notifying your customers and warning them that their cards will expire or that their subscription renewal/cancellation is pending would be good form.

Relying on revenue that will come in only if your customers "forget" to cancel their subscriptions is just bad business IMHO.

You see I have learned in my life that going an extra mile bears an unfathomable premium - as long as your product is actually required.

The same goes for emails and calls - If the email is a product itself (what they require of your services) then by all means - You're not supposed to work for free are you? But then again we don't say "I sold five emails today".

Of course you bill your customer for email and phone, you price it into your hourly rate, product price... whatever. But you don't go out and show it to them on balance. Whatever you have gained in transparency - you have lost on the grounds of appearing cheap or tight. This too I see as bad form.

not exactly ethical, dipping into all these expired accounts. but what's that got to do with anything?

It'd be unethical if they were canceled subscriptions, but these are active subscriptions the customer never canceled... how is it unethical to continue billing the customer as promised? Do you want your utility company to keep track of your credit card expiration date and turn off your power when that date arrives even though you haven't called to ask them to? I think the common case is that when your card expires, you are issued another one with the same number and a later expiration date, there's not even anything to update with companies that stored your card for a subscription.

Well, basic utility service isn't such a good comparator: in fact it's on the opposite end of the spectrum from a magazine subscription (which is essentially a fluff purchase, in the vast majority of consumer cases).

In fact with gas providers (or at least my own) are required to keep service running even in the presence of events which might normally trigger a cancel in other commercial contexts (customer in default for multiple months, not reachable or even apparently "dead" according to public records, etc). At least until the warm season starts.

Magazine subscriptions are at least in grey area, as far as this goes.

They're not expired accounts--they're active subscriptions with valid payment information where the expiration date on the card used to subscribe has passed. Such cards are often still 'good'.

Members can easily cancel the service any time, but they have to actually cancel. If we cancelled everyone with an old card we'd be hassling a lot more people than we'd be helping.

please see my collective response to these remarks: http://news.ycombinator.com/item?id=1848152

I'm not exactly sure what is unethical about continuing to bill customers for a service they haven't chosen to cancel.

Also, "expired cards" are not the same as "expired accounts."

Responding collectively to sibling responses here (to my post, above):

I just think it's at least an ethical area, given that it seems not to be common knowledge that cards can continued to be billed even after the card expires; and given that consumer magazine subscriptions are, in the vast majority of cases, highly discretionary, i.e. fluff purchases (as opposed to things like utility service, medical prescriptions, etc, for which the exact opposite stance should apply, as far as this goes).

BTW, a good barometer for the fact that it's at least a grey area issue is that (in the original case here) the company would readily refund that one customer who _took the trouble to complain_ about the post-expiration charges, indicating that on a very basic level, they understood well enough that that customer was being short-changed, or not dealt with in an above-board fashion.

So if you're willing to recognize that a customer has been short-changed if they take the trouble to complain -- why not (other than the short-term profit motive) do so, proactively, for all customers who fall into that same "gotcha" situation?

I just feel that in grey area cases, companies should err on, you know, "doing the right thing" as opposed to (short-term) profit maximization -- especially as doing the right thing has a way of paying greater, long-term dividends.

So at the very least, they can at least _attempt_ to notify the customer that the card has expired, and that it is their policy to continue to keep billing for that subscription unless told otherwise.

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