If any company I did business with changed the terms of the business such that I would be charged when I previously wasn't, and then they automatically charged me, I'd be absolutely livid, regardless of whether they sent me an email (that may or may not be sitting in the bottom of a spam folder) or not.
I don't think they should be on the hook for providing people with free service that costs them money if they need to change the terms, but it should be 100% manual opt-in (with people who don't opt-in having their service canceled) if it involves a price increase or wholly new charges where there were previously none.
Based on the fact that their apology seems centered around the email bug and not the initial premise of adding charges without users having to opt-in to them, I have to disagree with some of the comments here that this proves they "get" customer service.
I think you're dead on. The apology is interesting for what they don't apologize for and one could fairly presume they'd do again: raise prices/fees as they feel like it and on an opt-out rather than opt-on basis.
No company deserves to have my credit card details tied to an account which may at some point arbitrarily charge me $$ which they notify my of via email on an opt-out basis. There are countless reasons why I might miss such an email not the least if which is simply email overload.
I see it the opposite way — I do not want my service arbitrarily canceled just because I didn't see an email sitting in the bottom of my spam folder. Unless we're talking about some exceptionally expensive service here, any plausible price increase is unlikely to be more upsetting than total loss of a service that I apparently considered worthwhile in the first place.
IMO, the best thing is to grandfather people in. The next best thing is to just let people know what's going on, move them over and offer a refund if they are dissatisfied with the new plan.
We'll have to agree to disagree. I will always fall on the side of companies not charging me unless I explicitly agree to the terms. Partly because I'm just wired that way and partly because I'm sick of companies trying to get in on that "gym membership"/AOL billing where they have a huge percentage of customers that don't even use the service but have just forgot they are being charged.
I've had it up to here with companies pulling shit like making joining one click on the web and cancelling a multi-hour phone call. So yeah I may be a bit sensitive and reactionary about billing matters but I believe it is justified given how poorly most companies handle these issues these days.
So you believe a company can charge $99 for a yearly service and then say "by the way, we may increase prices in 30 days if we decide to do so." So what happens to the $99 I paid?
They breached the contract by charging the additional fees. A company can't change the terms and say "whoops, that plan didn't work better start charging for small orders."
> So you believe a company can charge $99 for a yearly service and then say "by the way, we may increase prices in 30 days if we decide to do so." So what happens to the $99 I paid?
Uh, it would still be paid? Price increases only apply to new billing cycles, not retroactively, so I don't understand what you're getting at here.
The point is that it's incredibly easy — and relatively standard — to incorporate the possibility of changes into a contract.
This is an excellent piece of strategic PR inasmuch as it refocuses the debate on the email issue (as is evidenced by the below posts), and obfuscates the real issue, which is that Instacart changed the terms of service and proceeded to charge people, something to which they never consented. Whether or not Instacart bothered to inform their customers about this fact is irrelevant; they shouldn't have done it.
From a customer standpoint, their actions are appalling and the apology is obviously unfulfilling and fails to recognize or rectify the true issue. But, from a business standpoint, this post is very strategic and effective at mitigating public outrage. Although I'm still upset by the choices that Instacart made, I can't help but appreciate the effectiveness of their response tactics.
For some reason this strikes me as the rule "it's better to ask for forgiveness than ask for permission." If I'm being pessimistic, I would assume they decided to automatically opt users in, charge them, and create this hubbub and just apologize about it later. However, the good person in me decides to believe that they are sincerely apologizing for a bug.
Anyone commenting here actually know if there ever was a contract with the early adopters? It could have said for all anyone knows that "this is a beta service, it most likely won't remain free forever and we reserve the right to change the pricing model at any time."
Less than 4 hours after finding out about the issue here's a complete explanation of what happened, a public apology, and an appropriate fix. This is good customer service.
good customer service would have been to notify their customers every time they are going to charge against their card vs having to have the customer monitor explicitly what charges instacart is making.
They made a mistake. They admitted it. Your argument is an appeal either to time travel or omniscience. It is hard to understand what you expect from them at this point.
I don't buy the application of "mistake" that companies like to use. No, changing your pricing model and (by many accounts) simply not telling your customers, or not ensuring -- however difficult -- that all of your customers were told, is not a mistake. It's professional negligence, or whatever you call that when a company does it.
As many have pointed out, it's not acceptable to just continue running with a broken business model. That benefits no one. But changing your model and either not making absolutely sure to tell your customers or neglecting the attempt is just plain dishonest.
The cynic in me wonders if companies choose opt-out models because they think that a subset of their customers are not going to be bothered opting out.
A while back there was a lawsuit over one of the Canadian cable companies doing an opt out (negative option billing) and in general its not really considered a good business practice.
Of course they do, and many of them will make it as difficult as possible to switch without making it look like they're doing just that. Something you're taught is to make the "cost of switching" as high as possible.
I, personally, have continued to pay for a service I no longer used simply because it was such a pain in the ass to cancel.
You feel comfortable calling these people "plain dishonest"? Would you say that to their faces? Maybe reconsider; your point might be better cast as "it is a mistake not to be careful to ensure your customers are aware of business model changes".
I did not say that. What they did was "plain dishonest." I don't call myself a stupid person, but I have done (and will in the future do) stupid things. That does not make me stupid, and it does not make stupid things I do intelligent.
You are pushing to soften the insistence that customers should have regarding how they are charged. I don't see how that's a better approach than actually holding a company accountable for its actions, without necessarily judging the character of their employees or management.
Edit: Yes, I would say that to their faces. Exactly as I said it here, without personal judgment, but with a judgment regarding their conduct.
Hold on. Let's not forget where this started. They did try to tell their customers - via email. Your objection is that the form of notice they used was inadequate.
That's a fair objection, but choosing an inadequate form of notice, by itself, isn't dishonesty. Knowingly choosing inadequate notice would be the problem. To me it seems equally (if not more) plausible that someone, mistakenly, didn't realize that email notice wasn't good enough.
I'll also add that it isn't clear that email notice was inadequate. Are there cases of people outside the 71 who were unhappy learning about the change from another channel (like this one)?
so when companies knowingly hide credit card charges, and doesn't notify users of term changes that may affect customers especially when it comes to hidden charges.. I don't expect anything, other than to bring to public what kind of company this is. Is it really a mistake to charge people's credit cards without notification ?
I disagree, he's not being obnoxious, the apology isn't super clear so he could be mistaken.
It reads like they've decided to take $99 from previously free customers on the basis of them not complaining when they were sent an email. If thats the case, I personally think it's a pretty crappy practice and any customer that claims to have not recieved the email should be entitled to a refund.
If thats not the case, they should probably take a look at the message because it's confusing.
p.s. Please don't come back with a selective quote. The "what happens" seems to conflict with the "Next steps" which is why I'm confused.
As far as I can tell they only offered to refund the $99 subscription fee, and not the excess delivery charges that the subscribers have been being charged for <$35 deliveries without their consent.
They should make good their customers entire financial loss.
They admitted (claimed?) they had a bug and apologized for the bug. They didn't acknowledge the real mistake: converting people from free to paid without their explicit approval (not just emailing them altered terms). That needed to be opt-in, not opt-out.
It appears as though they haven't even rectified that. It's still opt out. They're going to email 71 customers asking if they want a refund. What if they don't respond? No refund, right? What about the people who got the first email but didn't cancel, they still get charged, right?
I would find it difficult to trust any company with my credit card info if I knew the only thing standing between me and new charges for things I don't want was reading every email they send me.
I don't understand the situation of the other n-71 users. Instacart send an email to them, but apparently the users didn't have to confirm the upgrade.
What happened with the mails that got lost, went to the spam folder, where ignored because it looks like standard press release, went to the secondary mail account?
There was a post by someone who seems to have worked there claiming the mistake was when they were querying for the users to send the email to. Basically 71 of us were not included in the results of that query so the email was never actually sent to us.
Read the post again. They did not reverse the charges. They gave 71 people the opportunity to claim a refund. What they should have done was automatically issued a refund to everybody they charged - not just the 71 who didn't receive the email - because they never should have charged anybody who didn't opt-in.
>Second, we’re going to give these customers the choice to >either:
>Receive a full refund of the Instacart Express subscription >fee immediately
>Continue as a subscriber of Instacart Express for the next >year. We’ll extend the end date of your subscription >through April 30, 2014. This option includes unlimited free >deliveries for orders over $35.
They have an option to do that - but if they take no action, they wont receive a refund. And that only applies to the 71 users effected by the bug. The people who got the email but took no action evidently can't even claim a refund.
Can you imagine the backlash if Apple started charging $99/year for iCloud and auto-billed everybody who didn't cancel the service?
There's the other issue of the notice itself. If they decided in March to make the change, how much time did they give customers to decide? Given the timeline, it seems like it was "effective immediately" rather than giving proper ahead of time notice.
Nonetheless, even if they did discuss refunding, the entire process seems shifty. Every service I use (I checked!) warns me five business days in advance by email that they are charging my card or sends a physical mail two weeks in advance. Instacart should be sending an email on each event with the delivery fee spelled out clearly.
You can't win for losing here. A lot of people just won't read your email period. So you can either cancel the accounts of your free users and have 50% of your customer base freak out because you cancelled their account (perhaps wiping history in the process they find important) or you can keep them all active and upgrade them.
They could leave their accounts dormant until the users next signed in then ask them to either accept the charges or deactivate their account. That would be a lot more ethical than just going ahead and charging them and expecting them to opt out if they don't agree to the charges.
>converting people from free to paid without their explicit approval
they did not convert people to paid members, they renewed existing memberships for people who had not been been notified of changes to policies of the membership.
I take InstaCart at their word when they say that it was their intention to do the right thing from the beginning and only a small subset of their users were not informed about this change because of a bug.
Since I take them at their word, this means that the "outcry" and the blog post were when they discovered the problem and it's scale. They fixed it in 4 hours. As a user, that works for me.
Instacart is one of my favorite services. I use them every week. I want them to build a sustainable business and last forever, since I never want to visit a grocery store again.
When I saw this on HN this morning, my reaction was that it's easy for things to get missed in the chaos of startups.
Remember, these guys run a startup. They're juggling a million things, including a company that's growing fast due to high demand. These things will happen. It's how the team deals with issues like this that will make them a great company.
This isn't a credit card error. This would be like signing a contract with Sprint for 500 minutes a month for $20, getting charged the $20, and then being charged an extra per-minute fee that wasn't in the contract.
Kind of like when you get your latest Comcast bill, Sprint bill, natural gas bill and see that "effective $DATE we will be increasing our price by $X% due to $Y". Happens all the time unfortunately.
It doesn't happen like that though. Natural gas, sure. Power bill, definitely. I've never had natural gas or electric service where I entered a contract for a service at a fixed price. My cable and cell phone service are on a contract, they can't increase the cost during the contract period.
Maybe I misunderstood, but this doesn't sound like a credit card error. The charge was intentional. The stated error was failing to notify some people. The actual error was thinking that you can charge people's credit cards without their consent just because you gave them notice.
The 71 people affected were early adopters and had been enjoying Instacart's service for quite some time. I live just outside the area, and with 3 kids and both me and my spouse working, it'd be a godsend to get this service (right now we subsist on the occasional foray to TJs, Sprouts + Safeway deliveries when my parents are around to receive them). Safeway is costly and limited in choice. Our supermarket weekly spend is well over $100, so a single $99 charge might go unnoticed for a while.
If I had the service I'm not sure I'd be ready to quit over a $99 unless my inquiries met with bad customer service.
Agree completely. For a community of people at Hacker News who should "get" startups and business mistakes, I am surprised at how unforgiving everyone is.
Wait, so you knew about the 71 emails not being sent and did nothing? Also, I find it hard to believe it was only 71 emails because of the number of complaints I saw in the original thread, unless the majority of your customers are HN members.
What happened is that we made a mistake querying for the email addresses, causing us to miss a group of the first people to sign up for Instacart Express. This skewed heavily towards HN members. We knew a few people had been missed (because they emailed us after seeing the charge, and said they didn't get an email) but not why or how many.
I am checking out instacart, and a popup is being thrown on my face to register/login without the option to dismiss it! Seriously, WTH? This is beyond bad design, when your design is to extort the emails registration out the users. Not impressed.
I was in QA at a retail company. It's hard to do targeted notifications and updates. You miss one condition in a WHERE clause when defining your target and something like this happens. It is also fairly easy to figure out the size of the group you missed from a single example.
That's a cute response, but that's not how applications are written and presumably you know that.
I'm not excusing this. If they did it the right way they'd have
1. Set a date to cancel the existing program
2. Sent a targeted email to everyone enrolled in it which said, "We have major changes to the unlimited delivery plan effective xx/yy, if you would like to continue please follow this link and accept the changes or you will be opted out"
3. Cancel the old plans across the board on date xx/yy
But hindsight's 20/20, their explanation is more that plausible, and their response is more than adequate. Do they need to put on hairshirts and scourge themselves?
This fix seems a little lackluster. It would seem more upstanding to honor the agreement they had made, and collected money for: i.e. let the 71 users continue the delivery-fee-free plan (with no minimum) for the end of the term.
The bare minimum they can do is nothing, offering a refund on all of the delivery charges is an important step above, but offering a refund on the entire service so far?! That's quite an extra mile.
I'm afraid I didn't make it clear. I meant a refund for the most recent $99 auto renew charge that had changed the terms of service without notifying the customers.
No, Instacart made an agreement which they need to honor more faithfully. If the 71 customers had decided to change the terms of a business agreement similarly, their accounts would probably be closed and referred for debt-collection.
The fact that Instacart is a tiny startup has no bearing on whether they should honor their agreements.
What is the agreement that they are honoring in this case? They didn't have a plan for further $35 subscription, people were either moving to the more expensive subscription or canceling.
Allowing the customers who weren't aware to retrospectively cancel and also keep any value of the service they already used seems fair.
You can repeat that until you are blue in the face if you like. That won't make it a true. It is ludicrous to modify a business agreement without actually giving notice, and expect to keep the proceeds of that mistake.
If they no longer want to offer a free tier, they're free to end it. I don't think anyone is proposing otherwise. They are not, however, free to unilaterally move people to a tier that costs money and start charging them without an explicit agreement.
They've offered refunds on delivery charges and a full refund on the Instacart Express subscription fee for people who don't want to come along with them to their new pricing model.
Doesn't really matter. The fact that they charged without permission is seriously wrong, and I don't see them owning up to that. They seem to think their mistake was in not notifying people well enough.
They're a startup that's experimenting with different pricing models. If a plan they introduce isn't financially viable, it's unrealistic to expect them to continue to honor it otherwise they would drive themselves out of business b/c of failed experiments.
It's incredibly annoying and offputting, much like when Tech/Billing Support at my phone company plays hold "music" filled with cross-sell/up-sell advertising.
Offering a refund after asking? Awww, how cute. But since a customer needs to explicitly ask for returning money that she hasn't authorized taking, why not just start a chargeback process at the credit card issuer?
Seriously, automatic refund should be their first and default action AND THEN offering some kind of compensation for the inconvenience.
Agreed. If I were one of the 71, I wouldn't bother requesting a refund. I'd just call up the number of the back of my card and say "I didn't authorize this charge."
The fact that this company was charging cards without notifying their customers of a charge is very dubious. A simple email every time they charged a customer's card without explicit consent is all that is needed at a minimum. I think its more of a public service more than anything. How many other people were they charging unknowingly ?
It didn't. I think the original article jumped to public shaming far too quickly. The author made no attempt to resolve this through other mechanisms. I have no problem believing Instacart was not even aware that a number of their express customers never received the email.
Did you read the same article I did? The author emailed instacart... He even pasted the full email correspondence. The representative did not accept responsibility for the email not making it to him ("I apologize if for some reason you did not receive it.") which we now know _was_ instacart's fault, and did not offer any refunds.
It took the public shaming before Apoorva showed up on the thread and offered his money back.
We know _now_ that it was Instacart's fault. The only fault I take with the email is the use of the word "if" instead of "that". Given a single case of an email not being received it's not unreasonable to assume it was caught in a spam filter.
As for refunds, sure, Instacart could have offered one, but honestly I don't think they should. As an Express member who was surprised by the delivery fee, there's no way I could have missed the fact that I was being charged one before I placed the order. The very dropdown you use to pick when you want the delivery also tells you what the fee will be. The fact that Caleb went ahead and placed the small orders that had a delivery fee is entirely his own fault.
And I also disagree that it required public shaming to be offered a refund on his express membership. He never asked for one in the first place. If he had responded to Mike and said that, given the changes to Express, he would prefer to have his membership cancelled, Instacart most likely would have gone ahead and done that for him.
I'll comment on this just to clarify a few things and we can agree to disagree, but these are just my thoughts:
1) I'll admit I didn't notice the fee being added because I don't schedule my deliveries for future times, I just select "Immediately" and go on with my day. I don't and shouldn't ever have to expect to read to the side to see a $7.99 fee being added because I paid $99 a year to have that fee removed. Sure, I could have noticed the total amount of the bill but I didn't.
2) I also didn't place significantly small orders ($10 minimum). I placed a few orders usually in the $25-$30 range that was enough ingredients for one or two nights dinner. Two of my orders in question were under this $35 limit but not a significant amount like you seem to have claimed as a fact.
3) I didn't want a refund for my express membership nor did I want a refund of the $7.99 delivery fees associated with those orders.. I wanted an answer on why I was receiving this fee after subscribing to Instacart Express. If I would have wanted either of those things I would have expressed them in the email or blog post.
The answer I got was basically that they changed the policy, charged my debit card, and it was unfortunate that I didn't receive an email.
This is just shady as can be. I went through their Twitter feed, their homepage, their blog, their terms and policies, and scanned all of my email accounts to see if I could possibly have missed the email or notification. There was nothing related to this policy change anywhere which I find wrong.
I felt that informing other users about this was beneficial. I'm was sure I wasn't the only one that it affected (two co-workers were affected, I learned of the second one after writing the post) and if I would not have posted this blog post I'm almost positive that Instacart would have paid no more attention to this nor informed the public that there could have been a mistake and informed them.
"Did not receive an email about this change of policy. Not only did I not receive this email, neither did my wife nor a colleague, who also is a Instacart Express user."
+ in this thread "A few days ago, my gf started complaining about some sort of $3 extra charges she noticed."
This makes the 71 user remark looking suspicious, except the 71 were based on some geographical selection error.
That does sound suspicious. I thought there were 71 total who bought the deal, but it does say "71 of these emails" which seems to indicate that it's a proper subset of the total emails that were to go out. It seems like an unusual coincidence.
Another possibility would be that the selection was based on when the orders were placed, and that the three of them all bought it at the same time because they decided together to buy it.
I think this is a really good response from Instacart. Heroku could learn a few things from them I suppose. But again, good response from the Instacart team. well done.
As with Joyent and TextDrive's lifetime hosting, this company going out of business is a valid solution to what they claim is an unsustainable promise they made.
Reneging on their promises is not.
P.C. Hodgell - "That which can be destroyed by the truth should be."
In these cases I doubt that faithfully keeping the promises they made would destroy either company. They just feel they can get away with it, and so they break their promises to save some money.
Anyone who remembers Kozmo should know that the original pricing model is doomed to failure. Grocery delivery doesn't scale well, and 14 years of technological advancement doesn't change this fact.
I can see that there are many different opinions about this, but I think this raises an important question to startups that start free and plan to convert into a paid service on how it should be done the right way, without upsetting customers.
IMO, I think it depends on when they made these plans. If this was their path from the beginning and the service was free for a specific reason, I think it should be clearly pointed out on the website that the service is free for only a specific period of time.
If the plan of charging customers was added later on (after customers stared using the service), the solution would be to: definitely don't charge customers without them opting in, even if you send them an email, even if you wait for some days after to start charging. Changing customers to a temporary "trial" phase would be a good idea I think. This way, customers will know that they need to pay when they use the service the next time.
Off-topic, but if you're in the Kitchener/Waterloo Canada area and are looking for an Instacart type service, try http://www.grocerygateway.com. I've been using it for months and am quite happy with it.
considering that this is coming as a response to the fact that they charged people without notice, it's not enough to just refund the money (as that option should have been available in the first place when they changed their terms). making up for something like this requires that you go above and beyond just "catching up" to where you should have been before. imo, since this is coming after the fact, they should refund the money and honor the terms of the arrangement their customers thought they were getting into.
Why don't they let people see their website? When you go to their homepage an ugly login box pops up in front of the content and you can't close it without removing its DOM element... Even if you do, the site becomes non-functional, you can browse the menus but they don't work... I'm not giving access to my Facebook account to someone I don't know and I'm definitely not registering just to check them out.
The right thing to do would be to grandfather those users and move them off the plan by trying to upsell them in someway. This is an okay solution, but I'm still tainted by the thought of arbitrarily changing terms instead of grandfathering everyone.
IMHO Compagnies should not change their TOS just by sending an email. On logging in the site, users should be updated, on the screen, with the new TOS and should accept them.
That's what Apple does on the iOS devices and I find it acceptable.
My gf started using Instacart and I completely fell in love with it. A few days ago, my gf started complaining about some sort of $3 extra charges she noticed. Being a startup founder myself, I reminded her that they are trying to build a sustainable business model because I absolutely hate having to deal with parking after going out for groceries. The word "parking" made her switch her mind immediately. The truth is that changing pricing structure is hard for any company, but I sincerely applaud what these guys are doing and don't mind at all if I have to order more to make it a sustainable business. I don't want another thing I liked destroyed by the silly Kozmo.com business model.
Yes, this: add to the fact that upward price moves will make your users revolt irrationally (that is, they'll revolt without considering whether any substitutable good or service would be less expensive), but that you have to execute the change perfectly to avoid transforming your customers into an angry aggrieved mob. Bumping up prices is the Triple Axel of startup moves.
I don't think they should be on the hook for providing people with free service that costs them money if they need to change the terms, but it should be 100% manual opt-in (with people who don't opt-in having their service canceled) if it involves a price increase or wholly new charges where there were previously none.
Based on the fact that their apology seems centered around the email bug and not the initial premise of adding charges without users having to opt-in to them, I have to disagree with some of the comments here that this proves they "get" customer service.