I used to work for a CPA network that had made a killing promoting a special teeth-whitening “free trial” consumer offer. The offer was profitable because of something called “auto billing,” also known as “auto-renew,” or the industry term “continuation model.” No matter what you call it, it boils down to taking advantage of a consumer’s lack of organization or awareness, and I don’t think it’s ethical.
While there are some major differences between the teeth whitening offer I describe below and Hostgator, I’m disappointed to say that Hostgator utilizes the same unethical auto-billing practice. Here’s how the teeth whitening offer worked and what it has in common with Hostgator’s billing practices:
The Free Teeth Whitener “Scam”
- A consumer is offered a free two week supply of whitener in exchange for a small shipping fee paid by credit card
- If the consumer doesn’t cancel their free trial by a certain date, their credit card is automatically billed $65-$150(!) for a new month’s supply.
Obviously, consumers are upset by this automatic billing practice, and there are a few state Attorney Generals who have gone after companies that used this practice. It still exists, but it’s not nearly as blatant as it was a few years ago.
While I believe that a consumer should know better than to sign up for a free trial that requires a credit card number, I also understand that this kind of business practice is unethical…which brings me to Hostgator.
Hostgator Auto-Bills Their Clients Without Notice
If you purchase hosting from Hostgator on an annual basis, they will automatically renew your hosting account without warning. While this practice is probably disclosed (I’m sure there was some language about this in the T’s and C’s I agreed to) I think it’s unethical on an annual basis.
Monthly automated billing I can see – the amount of money is small and the frequency is often enough that people can just expect it – but auto-billing an annual account? In my particular case, I almost paid $120 for a hosting account I no longer needed. I’m reasonably sure Hostgator would have refunded my automatically billed purchase (they’ve been reasonable in all my interactions with customer support), but that would have wasted a lot of time for both Hostgator and myself.
So Hostgator, what about sending out an email notice a few days prior to billing me for $119.70? Seems like the logical, ethical thing to do, doesn’t it?
To be clear, it’s my fault for failing to keep better track of my hosting account due dates. However, if I can’t trust Hostgator to tell me when an account is coming up for renewal, it gives me pause about spending more money with them.
Bottom Line – Hostgator will automatically renew your annual hosting account without warning, so if your purchase something from them, plan accordingly.
P.S. If you purchase hosting from GoDaddy (whom I consider to be a lower-quality hosting company), they will not auto-bill you without notice.