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Web host refused cancellation, threatened collections over chargeback


magnesiumj
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tl;dr - Hosting company refuses refund and cancellation, credit card chargeback in favor of buyer, merchant threatens collections


On Feb 9, I purchased a VPS(virtual private server) hosting service from the merchant.

After logging in and attempting to set it up I found that the product and service were not to the performance and standard based on the advertised specs. I shutdown the server and contacted support the same day. I asked them to cancel the service and refund the charges as I would not be using it.


There support answer the next day was

Quote

"Hello I have started your VPS and it’s working"

 

I again submitted a cancellation request on Feb 10, saying that I cannot use their product and request a refund of charges.They reply quickly with back-to-back emails stating that

Quote

 

"However you’ve requested a cancellation and a refund. We do not have a refund policy, or money back guarantee that supports refund"

"Please see https://boomer.host/tos.html

Who the right of withdrawal applies to
Unless any applicable exception is mentioned below, Users who are European Consumers are granted a statutory cancellation right under EU rules, to withdraw from contracts entered into online (distance contracts) within the specified period applicable to their case, for any reason and without justification.

Users that do not fit this qualification, cannot benefit from the rights described in this section."

 

 

With that I opened a chargeback request through Citi (my card) for Canceled Service/Goods, truthfully stated that I attempted to work with the merchant first and they ruled in my favor on Feb 15.

I have not used the product since I requested a cancellation and refund. I have not logged into the service panel for the merchant since communications ended.

 

Feb 26 - I received an email from the merchant

Quote

 

"Hello.

I see you opened a chargeback

Chargebacks bring extra costs upon us that will be passed down to you, the consumer. I advice you to pay the associated fees as soon as possible via an ACH transfer to avoid additional fees from an eventual debt collection service.

Thank you"

 

With an attached invoice for the original purchase price + $15 chargeback fee.

 

The companies letterhead shows an address of Wyoming, I am in Colorado.


Can they send me to collections for this?
What is the best way to get in front of it to protect myself?
Are there any legal consumer protections for this scenario?

 

Thanks for reading and any advice!

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I'm going to offer a layman's perspective here.  It's not intended to be comprehensive, nor a representation of your legal rights and obligations under your purchase contract.  (I advise seeking legal counsel for that.)

 

Generally speaking, a vendor is required to deliver what they promised or refund your purchase.  However, a demand for a refund can be refused if they can correct any deficiency in a timely fashion (say, within a time frame that satisfies your needs); especially if they have a stated refund policy consistent with that behavior.

 

A credit issuer's decision to honor a chargeback request does not bind a vendor to relieve the buyer of a payment obligation.  The credit issuer relies upon a "reasonable" burden of proof, i.e. the buyer makes a satisfactory argument that the product or service purchases was inferior to what was promised and the vendor fails to convincingly counter that argument.  Issuer's standards in this regard tend to be all over the map.  Where the issuer sides with the cardholder, the vendor's account is debited for the purchase amount plus a chargeback fee.

 

Once you benefit from a successful chargeback, the vendor can pursue collection activity just as they might if you otherwise failed to satisfy any other means of payment method.  You, on the other hand, can seek relief of the payment obligation through the same legal means that would pursued if you entered into a contract with a vendor who failed to deliver as promised and yet demanded payment for goods/services.

 

In absence of further action on your part to assert/protect your legal rights under the transaction, it's reasonable for the vendor to warn of/proceed with collection activity. 

 

All of this is to state that, thus far, it doesn't appear that your vendor has engaged in anything afoul of accepted practice.  And, it's important for you to take necessary measures to push forward your dispute and protect your rights.

 

Beyond this statement, I'm not prepared to offer advice other than you may wish to seek out a basic consultation (typically modest fee) with a legal advisor for your best course of action.  

 

(Others, more informed, may suggest actions you might initiate without such consultation.  Please weigh my comments here, and any other input you receive, appropriately with the apparent authority under which they're extended.)

 

 

 

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47 minutes ago, hdporter said:

Generally speaking, a vendor is required to deliver what they promised or refund your purchase.  However, a demand for a refund can be refused if they can correct any deficiency in a timely fashion (say, within a time frame that satisfies your needs); especially if they have a stated refund policy consistent with that behavior.

 

Thanks for the insight from your entire reply. I really appreciate it.

 

I guess this is where I am splitting hairs with the vendor. I asked for a cancellation twice, he refused to perform it, so I performed a chargeback. I didn't see anything in the ToS regarding no refund policy, only contact the owner for account termination.

 

You mentioned further action on your part to assert/protect your legal rights under the transaction and necessary measures. Is there any specific actions you can point me toward to look into?

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3 hours ago, magnesiumj said:

 

It is. 32.68 for the invoice with the chargeback fee being billed.

TBH, for $32 and change I'd pay it and be done with them... leave truthful, negative reviews.

 

not stating a "no refund policy" simply means they lack a refund policy... because they don't offer them. I do not think they need, in ToS, to say they don't have a policy.

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5 hours ago, magnesiumj said:

 

Thanks for the insight from your entire reply. I really appreciate it.

 

I guess this is where I am splitting hairs with the vendor. I asked for a cancellation twice, he refused to perform it, so I performed a chargeback. I didn't see anything in the ToS regarding no refund policy, only contact the owner for account termination.

 

You mentioned further action on your part to assert/protect your legal rights under the transaction and necessary measures. Is there any specific actions you can point me toward to look into?

 

@hegemony addresses two key points (fleshed out): 

 

--  If the creditor deems that they have satisfactorily provided the contracted for services, they're likely within their rights to refuse a refund request.  A basic internet search suggests that no state imposes a refund requirement on a service provider.   (Similarly, if a refund request was made due to deficiency in the originally provided services, they're likely within their right to remedy the deficiency.)

 

-- If it were the case that the service provided were still deficient after your complaint, you likely have legal remedies by which you could bring action to void your service contract.  However, there are few (if any) paths to effect such remedy that wouldn't involve prohibitive costs vs the amount being billed.

 

As such, pursuing such action is likely impractical (unless you were to take it upon yourself to seek such action without professional assistance in small claims court; I can't comment on the advisability of doing so).

 

Finally, you haven't tried the service since you were advised that it's now working.  If the service now works as promised, they likely have no additional liability to you.

 

But, as previously noted, all this guidance is coming from a layman, not a credentialed legal resource.  If a greater cost was at stake, it would be worth coughing up something like $100 for a cursory review by an attorney.

 

Given that failure to resolve this matter in a timely fashion risks referral of the account to a collection agency, with possible adverse credit reporting, it may be most prudent to simply pay the billing and put the matter behind you.

 

If you want to maintain a certain degree of self-respect, you might reach out to the provider, state that their services didn't satisfy what you were led to expect when you contracted for them, but that you're prepared to settle the matter for 50% of their billing.  Require a statement that the account will be considered settled in full, they won't engage in further collection activity on the balance, and they won't report the account to the credit reporting agencies.

 

Their under little pressure to agree to the settlement request, but (again citing that the amount in dispute is relatively nominal), they may be glad to dispense of the matter in exchange for the reduced payment.

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Contracts between the parties typically spell out the obligations and what conditions might allow for the contract to be terminated, and if terminated, what refund may be due.  What specifically was IN your contract? 

 

Is this business or personal?  Yes, it matters...not all consumer protection law carries to business/corporate credit transactions. 

 

Beyond that, I would say hdporter pretty much nailed things...

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