4 ms·

Company hits small SaaS with $3250 chargeback because they “forgot to cancel”

35 points by KomoD 4y ago

KomoD 4y ago
The owner of ScrapingBee tweeted about a company who forgot to cancel their subscription, they agreed to a partial refund, but then they went silent, and launched a chargeback for $3250.
PaulHoule 4y ago
Subscriptions are a toxic business model.
- maxlamb 4y ago
  So how would you charge for servers?
  - worksonmine 4y ago
    Offer prepaid credits, that of course doesn't allow for huge surprise bills so it's not that common.
    - bharathyes 4y ago
      and suspend services in case of sudden traffic? many companies would not like that
      - foepys 4y ago
        For personal accounts prepaid would make cloud offerings a lot easier and more predictable. I personally don't use any "traditional" cloud services like AWS, GCP, because of the uncertainty of costs of anything going haywire while I'm at work or on vacation.
      - worksonmine 4y ago
        > many companies would not like that And many companies come here when they get a surprise bill after a buggy push. Not having a spend limit is more often than not a complaint. Notice I wrote "offer" not "switch to". They don't have to be mutually exclusive and big corporations could still get limitless spending if they want. I prefer when making mistakes is difficult.
      - detaro 4y ago
        If they don't like that, they don't have to enable spending limits.
  - julianlam 4y ago
    He would offer it for free, amass a large customer base while subsidizing it on VC money, and then alienate them all in 30 days by jacking up prices.
- schappim 4y ago
  Toxic, no. Subscription pricing certainly made Adobe products far more accessible when I was younger. Now that I’m older I do wish I could pay a one off payment.
  - PaulHoule 4y ago
    Subscriptions are healthy for some things: I have mixed feelings about Creative Cloud but it does make the product accessible to many people and also put updates into everybody's hands for products that they are continuously improving. On the other hand I think for a lot of cases the real business case is "user will forget that their bank account is being bled dry by 20 subscriptions they forgot about." Another one is that I've seen in the long term, together with bundling, they lead to industries that set new revenue records year after year despite being senescent. Cable TV is a particular case: subscribers had no ability to "walk with their feet" when MTV gave up showing music videos. I can't unsubscribe to CNN or Fox News or both of them and still keep my subscription to less pernicious channels. I'm afraid that Microsoft's GAME PASS is going to follow the same trajectory and make the scene for XBOX ONE games even worse than it already is. (Shoulda bought a PS4 is what I know in retrospect.)
- JohnFen 4y ago
  Subscriptions for legitimate ongoing services make a lot of sense. I use "legitimate" there because a lot of SaaS is only offered as a service to soak customers, with no technical need or benefit to being sold as a service. That's the toxic business model.
daveoc64 4y ago
I guess that it's not great to have such a request come in, but if the customer hasn't used the service at all for months, what would you actually lose by giving them a refund?
- deleted 4y ago
  [deleted]
- arthurcolle 4y ago
  Money
- KyeRussell 4y ago
  A chargeback isn’t just a refund. It’s a ridiculous inconvenience.
  - daveoc64 4y ago
    I mean that if someone has paid you $3250, but the cost to you of supplying them with a service that they haven't used is $0, refunding them won't cost you anything. The chargeback has happened because the customer isn't satisfied with the refund policy. If the company had pre-emptively issued a refund (perhaps minus a small admin fee to cover the transaction costs), then the chargeback may have been avoided entirely. The customer may have been happy to receive $3000 back. I would have a lot more sympathy for the company if they could quantify specific costs they have incurred in providing the service.
- discobean 4y ago
  Who knows if they used it or not? Maybe it was setup ready to go and none of their customers used it? But if they genuinely didn't use any resources, depending on the payment processor, card charge fees are not refunded - Stripe does this.
  - daveoc64 4y ago
    This is stated in the Twitter thread: https://twitter.com/PierreDeWulf/status/1636027002887995393 https://twitter.com/PierreDeWulf/status/1636027002887995393
favaq 4y ago
Well you were charging them month after month for nothing since they weren't using your service. So who's scamming whom?
- ThePowerOfFuet 4y ago
  The customer is the one who signed themselves up.
mgbmtl 4y ago
I run a small SaaS and it's surprising how many people never even use the service (over 20%). It's a small service that runs for cheap, so we don't have a ton of engagement/nagging emails, but we do send a monthly email when the card is charged (with an easy link to cancel). And lots of people still don't cancel. So now it's in our monitoring, at least for now, and we try to reach out when we spot non-users. I figure it's maybe great financially, but it's not great for the service (if they're not using it, they're not promoting it)

35 points by KomoD 4y ago

The owner of ScrapingBee tweeted about a company who forgot to cancel their subscription, they agreed to a partial refund, but then they went silent, and launched a chargeback for $3250.

PaulHoule 4y ago

Subscriptions are a toxic business model.

maxlamb 4y ago
So how would you charge for servers?
- worksonmine 4y ago
  Offer prepaid credits, that of course doesn't allow for huge surprise bills so it's not that common.
  - bharathyes 4y ago
    and suspend services in case of sudden traffic? many companies would not like that
    - foepys 4y ago
      For personal accounts prepaid would make cloud offerings a lot easier and more predictable. I personally don't use any "traditional" cloud services like AWS, GCP, because of the uncertainty of costs of anything going haywire while I'm at work or on vacation.
    - worksonmine 4y ago
      > many companies would not like that And many companies come here when they get a surprise bill after a buggy push. Not having a spend limit is more often than not a complaint. Notice I wrote "offer" not "switch to". They don't have to be mutually exclusive and big corporations could still get limitless spending if they want. I prefer when making mistakes is difficult.
    - detaro 4y ago
      If they don't like that, they don't have to enable spending limits.
- julianlam 4y ago
  He would offer it for free, amass a large customer base while subsidizing it on VC money, and then alienate them all in 30 days by jacking up prices.
schappim 4y ago
Toxic, no. Subscription pricing certainly made Adobe products far more accessible when I was younger. Now that I’m older I do wish I could pay a one off payment.
- PaulHoule 4y ago
  Subscriptions are healthy for some things: I have mixed feelings about Creative Cloud but it does make the product accessible to many people and also put updates into everybody's hands for products that they are continuously improving. On the other hand I think for a lot of cases the real business case is "user will forget that their bank account is being bled dry by 20 subscriptions they forgot about." Another one is that I've seen in the long term, together with bundling, they lead to industries that set new revenue records year after year despite being senescent. Cable TV is a particular case: subscribers had no ability to "walk with their feet" when MTV gave up showing music videos. I can't unsubscribe to CNN or Fox News or both of them and still keep my subscription to less pernicious channels. I'm afraid that Microsoft's GAME PASS is going to follow the same trajectory and make the scene for XBOX ONE games even worse than it already is. (Shoulda bought a PS4 is what I know in retrospect.)
JohnFen 4y ago
Subscriptions for legitimate ongoing services make a lot of sense. I use "legitimate" there because a lot of SaaS is only offered as a service to soak customers, with no technical need or benefit to being sold as a service. That's the toxic business model.

daveoc64 4y ago

I guess that it's not great to have such a request come in, but if the customer hasn't used the service at all for months, what would you actually lose by giving them a refund?

deleted 4y ago
[deleted]
arthurcolle 4y ago
Money
KyeRussell 4y ago
A chargeback isn’t just a refund. It’s a ridiculous inconvenience.
- daveoc64 4y ago
  I mean that if someone has paid you $3250, but the cost to you of supplying them with a service that they haven't used is $0, refunding them won't cost you anything. The chargeback has happened because the customer isn't satisfied with the refund policy. If the company had pre-emptively issued a refund (perhaps minus a small admin fee to cover the transaction costs), then the chargeback may have been avoided entirely. The customer may have been happy to receive $3000 back. I would have a lot more sympathy for the company if they could quantify specific costs they have incurred in providing the service.
discobean 4y ago
Who knows if they used it or not? Maybe it was setup ready to go and none of their customers used it? But if they genuinely didn't use any resources, depending on the payment processor, card charge fees are not refunded - Stripe does this.
- daveoc64 4y ago
  This is stated in the Twitter thread: https://twitter.com/PierreDeWulf/status/1636027002887995393 https://twitter.com/PierreDeWulf/status/1636027002887995393

favaq 4y ago

Well you were charging them month after month for nothing since they weren't using your service. So who's scamming whom?

ThePowerOfFuet 4y ago
The customer is the one who signed themselves up.

mgbmtl 4y ago

I run a small SaaS and it's surprising how many people never even use the service (over 20%). It's a small service that runs for cheap, so we don't have a ton of engagement/nagging emails, but we do send a monthly email when the card is charged (with an easy link to cancel). And lots of people still don't cancel. So now it's in our monitoring, at least for now, and we try to reach out when we spot non-users. I figure it's maybe great financially, but it's not great for the service (if they're not using it, they're not promoting it)