I realize this dispute with Classmates is kind of a distraction from the theme of the day, but there are probably more than a few dollars nipped from my pocket at stake. Plus, in the spirit of sovereignty of Flight 93, I find it depressinng to just keep my seat while this sort of thing goes on. Bear with me. Jeff Jarvis just linked to a guest post on GigaOm by Robert Young about the way Internet 2 is impacting the firm-customer relationship. This situation fits right in. It's about preventing exit.

To get back to the fracas, if I understand Classmates correctly, they're now willing to refund half the money that they extracted from my account without permission. That's a little like offering to return half the toe they've just chopped off, but it's a step in the right direction. It's not a step that suggests they've quite grasped the concept of integrity yet; nor is it very competent from a business standpoint, but it does kind of shred their claim to having an unbreakable policy about refunds.

And there's something else of note. Either "Suzie" is in communication with someone who can make on-the-fly changes in policy (unlikely on a Saturday afternoon), or she's reading from a script that tells her, for instance: "After three irate email responses offer to cut the membership fee in half." But that's not important. What's important is what the exchange reveals about the company's ethical standards, which just aren't very high, and about its business savvy, which also isn't very high. At least, it's not high enough to cope with the very medium that gave them a market opportunity in the first place.

Another note: I'm not sure that the extrapolation I made below, about the total cost to customers of Classmate's "automatic renewal" policy, is statistically reliable. It probably isn't. But I'll bet it's not an order of magnitude off, either. Basically, they're making millions off of this policy, and the only real reason they'd fundamentally change it, is if it starts to cost them more than that amount. Which is why Dell started to change their policies after their encounter with Jeff Jarvis. (And Lord knows, I'm no Jeff Jarvis. His pajamas are way better looking than mine.)

I wonder how long it'll take them to figure out how to pull their fist out of this jar?

If you're interested, here's the latest email with my interspersed reply:

Member Care wrote:

Hi Scott,

I understand your concern, and I would like to assist you.
Unfortunately, your membership is non-refundable and we really don't want to lose you as a Gold member. I am authorized to offer you a membership at half price. This would give you continued Gold benefits at only half the cost. And you will no longer be in the automatic renewal program.

Whether I'm in the automatic renewal program ought to be my choice, not yours. You've just revealed that you can arbitrarily designate people as automatic renewals, nullifying the choices your customers make. Thanks, that's pretty much what I thought.

If you would like to receive your current membership at half price, please respond to this email and I'll be happy to process your request for you.

Because you've offered to, essentially, refund half of the fee that you claim is non-refundable you've admitted that your unbreakable policy pretty much breaks in half. I propose that you go a bit further; crumble it up into tiny bits, and toss it in the trash. I reiterate, just in case you missed it, that I never authorized you to deduct any membership fee from my account subsequent to that first year, so your terms of service have no bearing. I didn't agree to them. That is simply an empirical matter.

Scott, I hope this information was helpful. If we can be of further assistance, please let us know.

Well you're helping me make my case, but you're not helping your customers very much. If you read the comments to my blog posts here and here you'll note that just within the limitted community of readers on those two posts there are several people who have experienced the same thing as I. Extrapolate to the larger population from this small sample and the number of people who've had their pockets picked in this way may very well be large enough of attract the attention of a media mavin or two.

No, seriously... extrapolate the numbers. You took a class in statistics, right? I don't know that all 10,000 readers of The Jawa Report read my posts, but lets say that 1,000 did. Two of those people have had similar experiences. Let's say total traffic on the internet, within the US, is about 200 million (according to figures compiled by Global Reach). Now, assuming that everyone who had my experience spoke up, and that there aren't any people who read, understood, but were too shy to comment, that would mean that there are something like 400,000 people who've been burned in this way, about half of them by your company alone! (Reunion Dot Com got a few too.) That amounts to somewhere around $8,000,000 that has simply "gone missing" from bank accounts due to this questionable "auto renewal" trick. Yeah, I'll bet you don't want to lose me as a customer... but strictly speaking it's your bad luck that you didn't. Because I'd have just taken my fairly returned fee and gone on with my life.

You might also check out Jeff Jarvis' dispute with Dell. It had rather profound consequences for that company, far beyond simply "handling" Jeff's initial complaints. It may take you awhile just to read through that one post of Jeff's, but there were 30 or so that preceded it, going back three months, and there are plenty of other blogs talking about Dell now, thanks to Jeff. Not customers, mind you. Former customers.

We might just be getting started...

Ironically most of the folks who read my blog posts on the Jawa Report are free market capitalists. It's just that they agree with F.A. Hayek that a capitalist economy has to be governed by "just conduct" or it winds up as something less than free, and something less than a market. Not that picking pockets isn't an art, of course.

Posted by: Demosophist at 10:53 AM | Comments (3) | Add Comment
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