Is Netpliance Slamming Customers?

visionik writes: "Today I received a charge on my credit card for Netpliance i-opener service, even though I called them prior to ordering and verified that monthly service charges would not be put on that card. According to Netpliance, they will be charging monthly service on the cards of everyone who ordered an i-opener since March 1st, even though their Web site and support people indicated otherwise. I'm contesting the charges immediately, but thought this should be brought to the attention of everyone else who ordered an i-opener directly from Netpliance." visionik kept a small diary of his dealings with Netpliance. In part, it reads thus: (more)

1. 3/11 I saw the article on Slashdot, and thought it would be a nifty project to run linux on, followed quickly by a thought that I didn't have time to mod it anyway, followed by another thought: hey, even better - i'll order one for my brother's birthday (which is monday the 27th)

2. 3/11 I called netpliance to verify that I could order the unit on my card, without service, and that my brother could subsequently sign up for services on his card. they said sure, no problem. i asked if it would arrive before the 27th, and they said -again- sure, no problem.

3. 3/11 I went ahead and ordered one a bit later in the day via the web form. The site said my total was $99 plus shipping ... nothing about service; and that the shipping would be 7-10 days.

But when visionik called Netpliance to inquire why the amount his credit card was charged was higher than he expected it to be, he learned that he was also being charged for service, including a prorated charge for service in March. He writes: "So I say I want to cancel the order. This guy laughs and says 'Fine, but you'll have to wait at least 30 days before we will [credit] your credit card.' That was enough. I told him I was contesting the charge and filing a complaint with my card company, to which this ballsy guy laughed again and said 'good luck'!"

I called Netpliance to ask them about this, and was surprised to reach a courteous human after only a few layers of voice-prompts. The sales representative I reached seemed taken aback by my questions, and surprised that the idea that anyone who'd been assured otherwise would be charged for the service. He quickly transferred me to one of his bosses, named Jerome. I asked Jerome whether people were being automatically charged for Netpliance's ISP service after being informed that they would not be via phone or the company's Web site.

He responded that signing up for the service was now required of all customers who purchase an i-opener from Netpliance. "According to the Web site, the service now automatically goes into effect two days after the order is recieved."

But what about those in visionik's situation? Asked whether all customers, like visionik, now being charged for the service had been aware of this change at the time of order, Jerome acknowledged that there may have been a gap between the change to automatic start of service and that policy being reflected on the Netpliance page. "I think it wasn't announced on the site [earlier in the month]. I hadn't looked at the Web site, so I'm not sure what it said. ... I'm not sure exactly when that change went into effect. There may have been a lag."

Might the i-opener again be sold without the service agreement-requirement? Jerome's diplomatic answer: "I'm not sure about that."

Jerome then transferred me to John, a customer-service supervisor, who confirmed that everyone who buys an i-opener direct from Netpliance is now being charged for the ISP service as well, and that there are "a couple" of people who are being charged although they did not sign up for the service or specifically asked not to be, but he did not indicate the actual number.

John described buying the i-opener device/service combination from Netpliance as a matter of convenience, and said "You can buy them at Circuit City and save shipping, or you can buy them from Netpliance and pay $40." For ones bought at Circuit City, currently the only i-opener's retail outlet, he said that to initiate service, "you do have to call. Our main focus is to sell it to our mainstream customers, a certain type of person we're aiming at."

Perhaps they should consider aiming at home-networkers looking for inexpensive flat-panel terminals as well.

Comments

It's a question of power

[copito]

Netpliance has all of the power in designing the contract, product, and terms of service. The consumer only has a choice of buying the product or not (they also have varying degrees of consumer protection rights depending on their state). The consumer should not have to question whether or not the company they are buying the product from is making a profit. They should only have to question whether the product and associated terms of service and future fees are worth it. Netpliance has the lawyers, accountants, and marketeers, let them set a good price for their service. Otherwise, where does it stop. Should a consumer not buy products from a money losing e-business? Should an ISP customer not use expensive POPs (such as UUNet) because the cost to the ISP exceeds $19.95 a month for normal users. Of course not. Thats the beauty of market capitalism, a great deal of information and business calculation that the consumer does not have to care anything about is embodied in the price.

I have no problem with Netpliance realizing that they made a mistake and changing their offer, but I also have no problem with customers taking advantage of a good deal. Given the imbalance of power, I also think that Netpliance should at least honor the deal that was advertised at the time of purchase.
--

Aha, the fog begins to clear...

[Dirt Road]

For ones bought at Circuit City, currently the only i-opener's retail outlet, he said that to initiate service, "you do have to call...."

I was wondering how they would be able to nail someone who walked into Circuit City, paid cash for an I-Opener, and commenced to hack.

They can't.
Yessssssss!

From what I've heard, they haven't made any real changes to the box, either. In essence, all the noise they made about modifying the system to prevent hacks was window dressing to mollify the stockholders.

HEY!

[Signal 11]

Read the fine print. They have not modified the boxes. You can still buy them at Circuit City for $99.

What's the big deal? Some guy got the shaft. This is news? Yes, netpliance dropped the ball, but we have the court system to deal with this. This just shows that this poor sap doesn't know how the financial system works. did you know that all I need to withdraw from your checking account is the first two sets of numbers on the bottom left of your check? No signature. Not even an amount. Just the number, and I can electronically suck you dry.

Credit cards have similar non-safeguards. If you think you've been ripped off, you need to contact your credit card person RIGHT NOW (within 24 hours, usually) and your liability is limited. You, and them, can then jointly go after the illegal debit. This kind of crap is dealt with predictably and swiftly: if you're right, the legal system will drop kick them down the stairs and then turn around and cut you a check (*cough*).

Here's some other agencies that'll be interested in hearing from you:

• Consumer Affairs (ralph nader!)
• Better Business Bureau
• Your local State Attorney General
• Most states have a 'consumer fraud' department. They'd like to hear from you too.
• Your local small claims court would like a $20 deposit to initiate action against them. Let them FLY down to defend themselves. You bought it from your state, they need to show up there.

In short, slashdot is not the forum to discuss Shafting 101 - yeah, it happens. But it's caveat emptor out there, I'm sorry to say. Call this an inexpensive lesson - it could have been worse. You could have signed a mortgage....

netpliance business model

[Hollins]

Certainly Netpliance should be taken to task if it pulled a bait and switch as indicated in the article.

However, a lot of anger seems to have been building toward them around /. for trying to force customers to use its ISP when buying its computer. The fact is, Netpliance sells the computers at a loss and has to use the ISP service to turn a profit. I would love to see them sell these nifty machines at a higher price (I figure a 10% profit margin is reasonable) and without any internet service tacked on, but until their production ramps up, I don't expect to see it, if ever.

Re:netpliance business model

[Nastard]

This isn't really anything new. Until recently I worked for a major ISP that provides cable modems @ your home. We had two types of markets - "buy" markets and "lease" markets. In a buy market (not many), you pay for the modem and we provide cheaper service. In a lease market, we provide the modem and the service for an extra 5 bucks a month. The modems are about $250 a pop for the company, so this is obviously a loss (especially considering the free install/1st month promos). So to make up for that loss, we didn't maintain our network and screwed our customers.

We did explain that we would be charging to the card, but getting any kind of credit back was a pain for everyone. The billing dept. was so f-ed up that a simple chargeback could take 60 - 90 days. The process was so confusing that half of the employees didn't truely understand.

I can recall one occasion where a customer would contact me personally every month or so to let me know that credits *I* personally walked over to billing, hadn't shown up on her card yet. At the time of my leaving, the issue still had not been resolved.

The service was even worse. 90% of issues would be sent to "level 2" (expect to be on hold for at least an hour). The other 10% would end in a truck sent to the house, which usually resulted in a "line tech" that rarely if ever showed up. To compound the issue, we had no contact whatsoever with these techs. If your service goes out, good luck getting it fixed, and good luck getting credit for it. The best part was, we were not allowed to apply credits until AFTER the service was restored.

This sounds like a diatribe, but it is relevant. Screwing customers of a service for as much as you legally can, while providing as little help as you can, while using their own credit cards to put them into a proverbial headlock, is nothing new.

My advice: always ask for statement billing whenever you can.

Re:Wait a second here..

[The Reverend]

There is one, and only one, issue here:

He was told they would not charge his card for the service and then he was charged. Comments about anything else are obfuscation.

Where netpliance is coming from

[fridgepimp]

Lets get a couple of things straight before we go off wailing on netpliance on all fronts.

First of all, I will say that charging someone for something they didn't order or authorize is patently wrong and in most countries/states considered a form of fraud. I agree that this is how it should be.

Let us also remember that Netpliance likely doesn't make a dime on their hardware. Do we really think that if LCDs were this cheap that someone else wouldn't have thought of this sooner? I imagine netpliance is making its money on the service (similar to the `buy a 3 year subcription to MSN and save $400 dollars on your new puter' deals). This is a valid business model and they shouldn't be criticized for it on its face.

Lets be careful which aspects of business we criticize. And I should like to point out, even $199.00 or $249.00 wouldn't be such a bad deal for this baby w/o service so just because there isn't a company dedicated to losing money so you can have neat stuff isnt a Bad Thing(tm).