Is it ethical to charge for services not rendered?

By | March 25, 2014

ID-100240983HostDime and Regus would say it’s fine to charge you for services you never used, sternly standing behind the fine print in the contract you signed.

But is it ethical and fair?

As some of my readers discovered, HostDime and Regus don’t care if you were in the hospital for surgery, got in a car accident, or your business failed.  You agreed to a contract.  And if you never used their services, that is your own fault, not theirs.  No refunds.

And as one reader found out, if you still owe Regus money according to the contract, they will gladly send your account to collections and damage your credit, despite already receiving money for a service they never provided.

services-not-rendered-setupAll this for a web hosting account that was never logged into once, and a private mailbox that was never even setup.  In both cases, the customer never even completed the setup process on the account, much less ever used the account.

But since HostDime and Regus had their credit cards, they gladly charged the customer and refused refunds.

They didn’t even try to save the customer, by offering a credit for the unused service to be used for future services with the company.  So instead of keeping a happy customer, they created an upset customer.

When these companies were contacted by the customer explaining their situation, both Regus and HostDime chose to enforce the contracts and keep the money, even though no services were rendered, and the customers had not even set up their accounts yet.

Contract vs. Compassion

Now, HostDime and Regus are within their perfectly legal right to keep the money.  After all, the clients did sign a contract agreeing to it.  But…

  • Is it really ethical of companies to put such clauses in their contracts to begin with?
  • Should companies be a little less greedy and be more compassionate with their customers?
  • Should they only charge for services actually rendered?

I’ll leave that for you to decide.

A Better Approach

loyal-customerWhether or not you think it is ethical to charge people for services not rendered, these companies made some serious blunders in customer service, which resulted in upset customers, damaging social media posts criticizing the company, and ultimately this article.

The companies could have approached this situation completely differently, and won a loyal customer, ensured continued revenue for the company, and received positive social media feedback.  All they would have had to do was offer the customer a credit for the unused service, to be used towards future service with the company.

It would have been very different if they said something like this:

“I am sorry to hear that you had personal issues that prevented you from using our services.  I see you never set up your account, but you do not qualify for a money back guarantee, so I cannot offer a refund.  I can, however, give you a 2 month credit towards your account to make up for the time you were unable to use the account due to your personal situation.”

short-sightedBoth customers stated they would have had a positive opinion of the company, if they would have been offered a credit.

The HostDime customer said she would have considered staying with HostDime, and the Regus customer said he would not only have stayed with Regus, but would probably have upgraded to an office several months down the road if he was offered a credit.

But, unfortunately, that is not the path the companies chose.  They chose to keep the money, anger the customer, and in the case of Regus, attempt to collect more money.

Short sighted thinking, that resulted in a short term gain, and a long term loss.  Which leads up to some new questions:

  • As a company, is it better to yield a bit on the contract and keep a happy & loyal customer?
  • Should exceptions be made when a customer has an unforeseen hardship?
  • Or is it better to take the money and and accept the fallout of an unhappy customer?
  • Which way is more profitable?
  • And which way is more ethical?

Either way, I know how I would run things.  How about you?

Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Tejan Ausland

Tejan Ausland is an author and ghost writer, with years of experience in both creative and technical writing.


2 thoughts on “Is it ethical to charge for services not rendered?

  1. Tejan Ausland Post author

    Both customers stated they would have had a positive opinion of the company, if they would have been offered a credit. The HostDime customer said she would have considered staying with HostDime, and the Regus customer said he would not only have stayed with Regus, but would probably have upgraded to an office several months down the road.

    Reply

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