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  1. #1

    Exclamation Dreamhost billing issues (drawing money for orders made in the future etc)

    Perhaps you have read about this billing issue that is hitting Dreamhost's clients right now;

    Their Statusblog
    Their forum

    I think every customer have been affected by this, I was too (even if I have not yet seen my CC being drawn as I don't have "automated payments" set up).

    I am still a client with Dreamhost, and they aren't hiding this, however it is very serious.

    Discuss!
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  2. #2
    Join Date
    Oct 2007
    Location
    The Netherlands
    Posts
    75
    Yup, I also have had an email claiming I owe them $325.06 . However, when checking the balance in the webpanel it says $0 (probably already fixed).

    Still, I believe that even if you have automatic payments set they will only bill you at the beginning of each month, right?
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  3. #3
    Some claim to have money drawn from their accounts, so I don't know about that. I didn't have my account set to automatic paymets, which I am glad for.

    I am very interested to see an explanation of what exactly happened and also an apologize to all customers of Dreamhost.
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  4. #4
    Join Date
    Oct 2007
    Location
    The Netherlands
    Posts
    75
    I honestly don't need an explanation or apology as I wasn't damaged - only an incorrect e-mail.

    People will always make mistakes, including the programs they operate
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  5. #5
    Join Date
    Oct 2007
    Location
    The Netherlands
    Posts
    75
    lol just read about some "newbies" cancelling their account at Dreamhost to prevent being charged $380.
    (I know it isn't funny but it's quite hilarious from the sideline )

    http://www.dreamhoststatus.com/2008/...comment-109963
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  6. #6
    Join Date
    Oct 2003
    Location
    Chattanooga
    Posts
    8,928
    I'm glad that I only had paypal with them, they sent out an invoice for my accounts about a year in advance!
    *wipes brow*
    David
    Fused
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  7. #7
    Quote Originally Posted by Dedicational View Post
    I honestly don't need an explanation or apology as I wasn't damaged - only an incorrect e-mail.

    People will always make mistakes, including the programs they operate
    Well, if such a thing is "joked away", aka money being drawn from peoples' accounts, Dreamhost will lose parts of their clientel as well as their reputation.

    For me I am not looking directly for an apology (I wasn't affected billingwise, just like you), I do want an explanation on what exactly happened though.


    EDIT: Clients also seem to have lost affiliate earnings.
    Last edited by Henrik; 01-15-2008 at 10:14 AM.
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  8. #8
    Dreamhost (Josh) have identified the problem is now sending out emails regarding the issue + fixing all eventual charges (info I got from a Dreamhost employee)
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  9. #9
    I have had $288 drawn out of my checking account without a bill or a notice. I am pissed. Does anyone have a number that I can contact them about this?

    Thank You,

    Jason May
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  10. #10
    Join Date
    Mar 2003
    Location
    Canada
    Posts
    8,867
    Interesting, I just read about it on the HostJury blog.

    Link:
    http://hostjury.com/blog/view/93/dreamhost-billing

    Digg!
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  11. #11
    @Pat H Why not digg the original status post? It was unfortunate what happened, but still - what can we do?

    @jaymay75 Your money should be returned within 24 hours through an automated script, as I understood both the information coming out the back-channels and the official statusblog post update.
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  12. #12
    Join Date
    Jan 2006
    Posts
    42
    I am assuming that their panel.dreamhost.com can't be accessed because everybody is trying to check their accounts at the same time?
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  13. #13
    Join Date
    Oct 2003
    Location
    Chattanooga
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    Quote Originally Posted by anjur View Post
    I am assuming that their panel.dreamhost.com can't be accessed because everybody is trying to check their accounts at the same time?
    Precisely. It probably doesn't hurt that the article is all over digg netting thousands of extra hits. The e-mail that went out this morning to at least a hundred thousand clients probably isn't helping all that much :/

    (Ah, thank you for saving my ***, paypal!)
    David
    Fused
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  14. #14
    Join Date
    Sep 2006
    Location
    Carleton Place, ON
    Posts
    772
    It happens. Even the big companies like sprint and otherwise make mistakes. You take it in stride, bite the bullet, and realize that there are always going to be people who cancel for the littlest issue.
    Ryan G.
    Owner
    Umgardi.ca
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  15. #15
    Join Date
    Oct 2003
    Location
    Chattanooga
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    8,928
    So according to the Dreamhost blog, they've overbilled their clients about 7.5 million dollars in total: Wow.

    http://blog.dreamhost.com/2008/01/15/um-whoops/
    David
    Fused
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  16. #16
    I don't know about in the U.S., but in Canada, if you have a pre-authorized debit from your chequing account set up and you decide you for whatever reason to stop that process, you can send back or reject any pre-authorized debits that went through your account in the list six months free of charge. The bank sends it back to the payee as "not authorized" and the payee, if it's authorized, sends the customer an invoice or bill. If it's truly an error, then it's done what it is supposed to do - protect customers from this sort of thing by crediting their account and reversing erroneous service fees as a result.

    Nonetheless, this is a huge reputation hit for DreamHost. They will lose customers, likely in the thousands, but to what extent depends on they handle the aftermath and if every customer is satisfied. Each customer should have their bank accounts or credit cards credited fully, service fees reversed by the bank or covered by DreamHost and provided with 6 months of free hosting for the trouble. Even big, evil Endurance International Group (formerly known as Caird Corp and, before that, BizLand Inc) gave PowWeb customers 6 months free hosting for the problems suffered and downtime endured during their "server migration". Billing issues are, perhaps, the most serious error a web hosting company can make because you're dealing with people's money.

    Cheers,
    Doug
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  17. #17
    Thankfully I was one who had not set autorebill on. muhahahahahaha.
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  18. #18
    Join Date
    Jul 2006
    Posts
    647
    Mistakes happen, and when one like this occurs you can probably count on it not happening again.

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  19. #19
    Still, DreamHost should feel obligated to compensate its customers. Even three months hosting would be the decent thing to do.

    Cheers,
    Doug
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  20. #20
    Join Date
    Dec 2002
    Location
    texas
    Posts
    1,333
    If they billed 7.5 million at a 3% merchant rate this mistake will cost them $225,000 in merchant fees. Of course you would need to factor in somewhere around 2.5million in papal that's unaffected and about another 20% for cards that declined.

    I'm assuming they voided out all the charges before they settled. If they didn't they will be paying an additional 3% to issue refunds.

    My guess is that they will have somewhere around $10,000 in reimbursing to do for overdraft fees.

    The amount of chargebacks they have this month will probably 10x resulting in $10,000's in additional chargebacks and fees. The crazy thing is that you can actually do a chargeback even if you already got your money back from a refund. It happens to us all the time....

    The customer loss from it will probably be significantly less then one day of signups for them. The real damage is going to be with their reputation and trying to catch up on work load.
    Dreamhost is having one of the worst days they are ever going to have right now. If you were one of the people affected try to go easy on them while they get everything under control. I'm sure in a few days times they will have everything corrected and will reimburse you for any losses that have occurred.
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  21. #21
    Quote Originally Posted by dwrunyon View Post
    Mistakes happen, and when one like this occurs you can probably count on it not happening again.
    Yes, mistakes do happen - however the way that Josh (from Dreamhost) explained and commented on the issue on their blog was not a good one. (Referring to the jokes he's pulling.)

    In times like these he should have been utterly sincere and more or less "crawled to the cross".

    With that said, I'll still utilize Dreamhost as a hosting provider, though I do not agree with how they as a company has dealt with their crisis management.
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  22. #22
    Join Date
    Jul 2006
    Posts
    647
    Quote Originally Posted by hostgator.com View Post
    If you were one of the people affected try to go easy on them while they get everything under control. I'm sure in a few days times they will have everything corrected and will reimburse you for any losses that have occurred.
    Agreed.

    They've now posted about this on their regular blog, and it specifically mentions righting overdrafts too.

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  23. #23
    Join Date
    Jul 2006
    Posts
    647
    Quote Originally Posted by Henrik View Post
    the way that Josh (from Dreamhost) explained and commented on the issue on their blog was not a good one. (Referring to the jokes he's pulling.)
    I thought it was pretty funny (the Homer pic and the reference to the last newsletter).

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  24. #24
    Join Date
    May 2006
    Posts
    872
    Quote Originally Posted by dmehus View Post
    Still, DreamHost should feel obligated to compensate its customers. Even three months hosting would be the decent thing to do.

    Cheers,
    Doug
    Are you serious?
    hosted by HawkHost
    I Recommend: LimeStone Networks!
    The OverSeller Defender!
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  25. #25
    Join Date
    May 2001
    Location
    Dayton, Ohio
    Posts
    4,911
    I'd be rather interested to hear who their merchant account is with, since every provider I've worked with would have stopped accepting charges after a certain limit. I doubt they do $7.5M in charges a day so their merchant account shouldn't have been accepting that much or should have at least been flagged and the account owner contacted. Finding out about this 'mistake' by seeing an strange report is ridiculous!

    I've been reading the comments after the blog post explaining what happened and I have to say this was the best comment:
    # Leaving Says:
    January 15th, 2008 at 11:01 am

    Well, I’ll be leaving. And I don’t have autobill and I paid via PayPal so I didn’t even get charged.

    I am leaving, even with six months left on my plan, because I do not like the light tone. This is not transparent, this is moronic. This is high school.

    When you deal with people’s money, you take it seriously. There’s a few shades of gray inbetween IBM and the Simpsons. For example:

    “Dear Valued Dreamhost Customer:

    We made a major mistake last night. We’ll be writing up a detailed post on exactly what happened, and posting it to our blog (located at: blahblahblah) if you would like to know more.

    Everyone was billed in error yesterday, some of you multiple times. We are currently in the process of refunding all of the money taken from people we shouldn’t have taken it from. If you feel you need to call your bank and credit card company, of course you have every right to do so. I can assure you that we are dealing with each and every overage as quickly as possible, and that you don’t need to make that call, but we would never presume to tell you how to handle your personal (or company) finances.

    There’s no excuse for the error except human error. We realize that we have put people into difficult financial and professional situations, and we deeply regret that our actions have caused any inconvenience whatsoever.

    Some of you will already see refunds. If you have gotten a refund, and there are other extenuating circumstances (overdraft fees, exchange rates), please contact us at this special address we’ve set up to deal with individual issues from the billing snafu: blah@blah.com.

    You should see your refund by DATE, TIME. If you do not have your refund by DATE, TIME, please contact the billing address above and we’ll get right on it.

    Everyone here at Dreamhost will be working around the clock to make this right for everyone, down to the last customer.

    Also, we will be compensating every last customer for the inconvenience caused by this issue. We haven’t had time to discuss what form that would take yet, and we hope you understand when I say that we need to focus on other issues first. But we will be providing every customer with some type of credit or other gesture to apologize for our error.

    Finally, I’d like to thank you for being a Dreamhost customer. There’s no shortage of hosting choices and you choose to give us your money every month. We wouldn’t be here without your patronage and we understand that.

    Sincerely,

    Dreamhost Poobah
    Last edited by The Prohacker; 01-15-2008 at 03:25 PM.
    -Mat
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