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  1. #1
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    * Thoughts on Credit check for colo customers

    Hello Members,

    I understand this could be a controversial topic, but these days having a credit check done is pretty much standard thing whether you get a cell phone on contract or internet connection at home or just lease a house. I understand most providers want to fill up the facility no matter what type of customer it is.

    My question is why not do a credit check on individuals or small companies that use colocation facility.
    Would that be too much to ask for ?
    Can it be a providers first line of defense against delinquent customers?

    Would really be interested to know if its already in place with any or some facilities. International customers are out of this since they dont have a choice but to pay on time.
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  2. #2
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    Some ISP's like Cogent require credit checks as well.

    If the amount being paid is a large sum (or is an enterprise environment) then I think it is OK. But if I were personally shopping around (or even for the company), it would be a turn off and I would probably consider other providers. But then again, we don't have needs that would require an enterprise environment - so meh..
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  3. #3
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    If it's some massive enterprisey thing, sure.

    As a note, I have *never* been credit checked applying for a cell phone or internet connection. Though I do know AT&T enforces a poor tax and non-refundable deposits (aka fees) on less-well-off customers and forces credit checks.

  4. #4
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    Quote Originally Posted by quantumphysics View Post
    If it's some massive enterprisey thing, sure.

    As a note, I have *never* been credit checked applying for a cell phone or internet connection. Though I do know AT&T enforces a poor tax and non-refundable deposits (aka fees) on less-well-off customers and forces credit checks.
    I know this is off topic but how long have been with whoever your carrier is? Year of establishment?

    A bit' odd, as most if not all providers require credit checks (except for something like Boost Mobile or Cricket)
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  5. #5
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  6. #6
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    Quote Originally Posted by quantumphysics View Post
    If it's some massive enterprisey thing, sure.

    As a note, I have *never* been credit checked applying for a cell phone or internet connection. Though I do know AT&T enforces a poor tax and non-refundable deposits (aka fees) on less-well-off customers and forces credit checks.
    You are always credit checked when getting a phone.
    Why do you think they ask you for your social security number, they pull your credit right then and there.

  7. #7
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    Many companies, unless it is for a very large deal are concerned primarily with fraudulent transactions. The steps we in hosting go through to assure that the payment information is valid and belongs to the customer applying for the hosting have become standard. In the case of colocation where the equipment is in fact delivered to or dropped off at your facility you are in receipt of their server(s) but everyone, international or not, will be subject to the same consequences if they are behind on payments. Server disconnected from the network and power unplugged.

    The real question is, what happens to those non-paying colo clients when their bill is not paid and their stuff is still in your data center? It's not like you are going to send it back to them before you settle up on the payment and any additional costs for shipping. Truly though, most customers who are looking at colocation are probably stronger in the "bills getting paid department" because they have something to lose and have invested time and capital to get their servers shipped, setup and running.

    Billing in advance is probably another solution to making sure you are getting paid for the services you are providing to your clients. . .

  8. #8
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    I echo the same, whenever you are asked for your SSN, a soft or hard credit check is done.

    Quote Originally Posted by CGotzmann View Post
    You are always credit checked when getting a phone.
    Why do you think they ask you for your social security number, they pull your credit right then and there.
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  9. #9
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    I've had my credit checked for a colo contract, but only once of various providers I've used. I would be hesitant to do it for other than larger deals with well established companies because you don't always know who you are dealing with. I'd rather lose equipment than have my identity stolen.

  10. #10
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    Kuni I agree to some extend but again then there are also full cabinet customer who stuff the cabinet with $50 dual xeon and thier monthly bill is $1000 and try to empty the cabinet overnight and disappear. This is happened but again how feasable would that be, infact it would be the other way around for enterprise customer (pretty much safe).

    Lets see what actual providers think.
    Last edited by Kusai; 04-20-2011 at 02:29 PM. Reason: add
    IPStrada When uptime counts.
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  11. #11
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    We at Superb are providers for Colocation and I am sure as others would echo that customers would be hard pressed to "empty" a cabinet overnight and disappear. Unless these colocation facilities are not true data centers that require appointments and verification for coming on site, not to mention checks with billing to assure that everything is in order for a move, it would be virtually impossible for clients to abuse the system and their host in this manner. To reiterate, billing in advance pretty much takes care of it all.

  12. #12
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    If they're using you for colo, you already have their gear, possibly the core of their business in your hands. What additional security do you really need? Just don't let them get too far past due and I don't see what you need the additional security of a credit check for.
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  13. #13
    Quote Originally Posted by CGotzmann View Post
    I'd more expect to see credit checks on dedicated server deals.
    I wouldn't expect that for a single dedicated server, but maybe for someone trying to order a dozen.

    As to colo / carriers, giglinx wanted a business credit report, and since I didn't have one for them, was willing to accept a deposit. Since they're on the hook for whatever contract I sign up for, it makes sense that they want to make sure I can continue to pay over the term of the agreement. Seemed reasonable to me.
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  14. #14
    Quote Originally Posted by KarlZimmer View Post
    If they're using you for colo, you already have their gear, possibly the core of their business in your hands. What additional security do you really need? Just don't let them get too far past due and I don't see what you need the additional security of a credit check for.
    Definitely agree with this.
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  15. #15
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    Quote Originally Posted by funkywizard View Post
    Definitely agree with this.
    I would also agree with Karl on this one. With colo clients, you pretty much have all their assets in your facility. For the private racks we own in 151 front street clients are given 24/7 Escorted access only.

    As Kuni mentioned, it would be virtually impossible for a client to simply walk into the facility without proper escort. There are many security measures put in place. As an example, at 151 front street we would consider this a highly-secured facility which offers a 24/7/365 uniformed security desk, CCTV cameras throughout, door entry-card access, a front door “mantrap” for controlled entry and access cards for the elevators/meet-me-rooms.

    On topic, credit checks can sometimes cost you a deal. From our business practice we would only require a credit check or at the very minimum a security deposit either by a certified cheque or bank draft for opportunities that Bill a certain amount. Of course, this would be something you have outlined in your own company policies/procedures. If you try enforcing a credit check for a 1u, 2u or 1/4 rack opportunity it may end up costing you the deal.
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  16. #16
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    Our primary reason for credit check is verification of the business entity.
    Kind of unnerving to be sitting across the table from two FBI agents, trying to respond to the question of who actually truly owns the equipment, who actually truly signed the contract, etc, for those servers with the unacceptable content.

  17. #17
    Quote Originally Posted by Techee View Post
    Our primary reason for credit check is verification of the business entity.
    Kind of unnerving to be sitting across the table from two FBI agents, trying to respond to the question of who actually truly owns the equipment, who actually truly signed the contract, etc, for those servers with the unacceptable content.
    In my experience, you're better off not knowing, as long as you can prove it wasn't you.
    Last edited by foobic; 04-21-2011 at 01:48 AM. Reason: Sig removed. OYA-912561

  18. #18
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    Quote Originally Posted by Techee View Post
    Our primary reason for credit check is verification of the business entity.
    Kind of unnerving to be sitting across the table from two FBI agents, trying to respond to the question of who actually truly owns the equipment, who actually truly signed the contract, etc, for those servers with the unacceptable content.
    You can look up the business entity, registered agents, etc. without doing a credit check easily enough.

    Then I'm also not sure how a credit check screens out illegal activity, unless you're going to decline every single relatively new business, which would be a bad decision for most hosts, considering the amount of business that can come from customers you first get as start-ups.
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  19. #19
    Also worth considering that, you can't be forced to give out information you don't have. FBI can sound scary and get angry, but there's no legal requirement to go to great lengths to find out who your customers are; in many cases, there's no requirement to know at all. Times when I've been able to say "we don't have any records of usage from the date / time you're interested in" has led to far less hassle than times when I've been able to say "I think I have logs of what you're looking for".

    Had I not been keeping logs at the time, I could have avoided a trip to TN. No longer keep any logs.

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