I've just had an incident with a small US based webhosting company (I won't mention their name) whose TOS state that if I cancel my account with them, that they keep any funds already in the account. I had a similar problem with another host here in Europe a few months ago. In both cases I got my money back.
Here's what happens. If you prepay for hosting, for example you pay one month in advance, or you pay for 3months, and only use 1 month, then the host company TOS says if you cancel they keep the balance. Why? Nobody can tell me their reasons, but it stinks.
So, in my case, the funds in the account paid for this months hosting ($9.95), but I had another $18 in credit to pay for the next two months. The host said they didn't need to refund the $18. Wrong!
Are they allowed to do this? No, they aren't. FTC consumer law in the USA, and consumer rights law in the EU specifically says if a customer cancels a service for which a regular payment is required, then the customer MUST receive a refund for the full amount held in balance after cancellation fees etc. None of the webhosts I've dealt with have a cancellation fee, so any funds held after the account is cancelled are illegally kept.
How do you get your money back? The first step is to give the webhost the chance to refund the money. Why? Because you're going to need their response when you deal with a credit card company or Paypal. In your final letter to the webhost, be firm, but don't use bad language. Explain that you don't accept their conditions because these are in contravention of existing consumer law.
Also in the letter (or email) explain that if you don't get a satisfactory response in 24 hours you will be opening a disputed payment with your credit card company or Paypal - whichever you used to pay for the service. Also, tell them that you will at the same time file a written complaint with their local Better Business Bureau or Chamber of Commerce. In Europe, many towns don't have a chamber of commerce, instead tell them you'll file a complaint with the local consumer rights organization.
Remember, they are holding your money, and they have no right to this money. Just because they say so in their TOS doesn't make it right. The problem with most of these people is that they aren't business people. In the US, many small webhosting companies copy each others TOS because they can't afford a lawyer to draft their own. Quite a few small European hosts also copy the TOS of American companies without realizing US law doesn't apply in the EU.
In most cases, you should get your refund within 24 hours if you follow my advice.
I'm glad that it's worked out for you however the BBB and the Chamber of Commerce are often toothless and powerless to resolve your issues for you and threatening to report them will really only cause action if they actually care what those organizations think about them.
Can you cite this law/regulation where the FTC says that you will get your money back? I'm not arguing with you but I am just curious.
We offer any-time money-back on time not used so it's not like I really *care* that much but it is always good to know
I agree refund is warranted but..
It is an interesting issue. The hosting co has most likely given you a discount for buying in bulk (say a year plan). So, do they give you a refund based on their normal rate?
Nice information! hosting companies love to scam :P
Companies like DreamHost have devised a method to circumvent such laws.
When you sign-up they offer you a free promotional code to get $50.00 off your bill. Later if you try and cancel and get your money, they will deduct the $50.00 from your balance. Followed by $10.00 for the free domain name you get with your account. By the end of it, you're getting little to nothing back anyway, and then they claim that they can only "apply it to your account in case you ever come back" - go figure. Basically they're playing on the "After cancellation fees..." thing. Plus, they can only refund payments made in the last 30 days, regardless of how long you've been a customer or what you bought.
wow really good post i never thought about usa laws
thanks for posting
Great post and this will be 100% useful in near future when i look for hosting.