Can't cancel your subscription? Negative sum competition.

Ever encounter the situation where you are able to sign up for a service over the internet, but then when you want to cancel the service you have to call customer service and/or go through a big rigamarole?

I encountered this situation today when I wanted to downgrade the hosting plan on my old blog because I was paying for more bandwidth than I needed.

Although you are able to upgrade your account via the hosting service's (Netfirms') control panel, there are absolutely no instructions on how to downgrade your account. I had to waste an annoying amount of time (1) finding the phone number to customer service (2) waiting on hold (3) having to compose an email and (4) then having to respond to the email with more information.

Clearly, Netfirms' strategy is to make it difficult to downgrade so you won't bother. Netfirms increases its profits by giving worse customer service and in fact the inferior service costs them more money because instead of me completing the transaction by myself I have to use up their employees' time.

Is this something that calls for government regulation? Free marketeers will say "but the free market should sort this out." The problem is that laissez faire competition with assymetry of information rewards the bad behavior. A government regulation, requiring that any service or upgrade that you can sign up for on the internet you must also be able to downgrade or cancel on the internet, would create a benefit for the economy because consumers wouldn't have to waste time trying to cancel their services.

Comments

[probligo]

Always pay for subscriptions on a monthly basis (if you can) then it is a simple matter of stopping the payment. That usually gets their attention...

Good luck!

[Austrian]

Yes, if only we could have the federal government create an agency and hire auditors to ensure compliance with hassle-free cancelation because some people have to expend time/energy in removing themselves from a service they willingly signed up for. We could even claim it's Constitutional under Interstate Commerce! You sure you are not a Democrat? The only thing missing from your argument is "it's for the children".

[Half Sigma]

People sign up for a service under the assumption it can be canceled.

Making hard to cancel but easy to sign up for is bad dealing on the part of the company. As a libertarian, you should be ashamed of this bad behavior, because its bad behavior that leads to government regulation and lends credence to the argument that companies will never be honest competitors.

[Austrian]

Bad dealing leads to customer dissatisfaction. Which leads to doing less business and a risk of going out of business, if you make your complaints known to others (word of mouth). It only leads to government regulation when people feel their inconvenience justifies stealing my money to have government "look into it" and make life easier for them. Give me convenience or give me death.
Although you are right, we live in a time when few people have read the Constitution, even fewer think it should be followed, and even fewer are consistent in their belief that the Constitution should be followed.

[Half Sigma]

Many businesses have a model where they only intend to make a single sale to each customer, so a bad reputation does no harm their profits. There are far too many companies in the United States for people to know the reputations of any but the largest ones. This is an example of asymmetry of information--the business knows they engage in tricky business practices but their customers don't until they have already made their purchase.

[Austrian]

This "asymmetry of information" applies to voters and lobbying groups, as well as politicians in general. Most normal people don't have the time to invest in finding out enough about the political landscape to make an informed decision. Instead they rely on the flashy advertising (campaign speeches written at the 2nd grade level full of meaningless doublespeak). What do you suggest be done about that?

If you don't feel you know enough about a company's practices - and it today's day where you can google to find almost anything there really is no excuse for that - then you only have yourself to blame when you willingly go into dealings with them. Don't run and cry under Uncle Sam's skirt.

[christy]

my roommate had a real problem with this and vonage, took her hours and hours of phone calls to cancel, and I hear others have had the same issue. When you call to sign up they pick up on the first ring... good luck canceling, her service never even worked at all.

[Half Sigma]

Austrian,

Information about bad practices is only available for the largest businesses, and even then only with much Googling which takes a lot of time. I spent a lot of time on Google but I couldn't even find out which laundy detergent was best.

So it's simply not true that a consumer can readily find out about a company's business practices.

I can understand your argument that you have a philosophy in which the government shouldn't have any regulations even when they would provide a net economic benefit (the value of eliminating negative sum activities exceeds the cost of compliance and enforcement), but it's simply dishonest of you to argue that businesses don't engage in sneaky business practices such as making it difficult to cancel your subscriptions.

[Austrian]

"I spent a lot of time on Google but I couldn't even find out which laundy detergent was best.

So it's simply not true that a consumer can readily find out about a company's business practices."

Consumer Reports frequently judges products and I'd be surprised if they didn't cover laundry detergent at some point, although 'best' is a subjective decision. It's simply not true that you can't find consumer research on products, although of course that is no guarantee the product will work to your satisfaction.

As for business practices...pick a business, give me a day, and I guarantee I'll find something online about it.

In the past you would have had a better case that consumers would have to spend inordinate time and energy, but with online resources that is less of a problem.

[Half Sigma]

So the information about laundry detergents isn't available for free and it doesn't come up on Google. And this is a product at everyone buys--just about everyone in the U.S. has bought Tide at some time in their life.

Now go down to a smaller business, and sorry Austrian, but the information just isn't publicly available.

[Austrian]

So now your complaint is that you may have to pay for information it took others time and energy to research? This reminds me of my favorite Thomas Sowell quote:

“The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”

A two minute Google search on "laundry detergent reviews" provided me with the Consumer reports link (first) and this:

http://www.rateitall.com/t-262-laundry-soap-liquid.aspx

[Half Sigma]

Yes, reviews like "ooooooooo my gosh tide is so so so so so so cool.It makes my clothes smelllll sooooooooooooooooooooooooo good it is the best brand of detergent!!!!!!!!!!!!!!!!!" are so helpful.

[Austrian]

Half,

If you are an elitist snob, disregarding the opinions of more "common folk", and you are looking for a more in-depth scientific comparison of laundry detergent, then maybe you need to fork over some money for a Consumer Reports subscription. Or do you want government to subsidize that for you?

[WVMMRH]

i'm stopping payment on my netfirms.com account immediately.i've beena basic(2.95yr)customer for less than a week.my domain hasn't ben activated and i will not waste time with them on this.i have two domains via sitelutions for over two years and wholely satisfied with them.netfirms offer of 2.95 for a year sounded too good to be true. it is...

[WVMMRH]

i forgot to ask...am i within the law if i just have my credit card company simply stop payment to a company like netfirms?

i've never halted payment on anyone like this in the past.but i feel like the worst thing they can do is to cancel my account

[Michael]

Netfirms also makes it difficult to cancel auto-renew of a domain name. In fact there is no way online to cancel that process. They just assume that you will want to renew your domain with them forever.. it's a sadistic process and almost pure evil what they do.