1and1 Debt Collection Agency Threat Letter

I’m posting this under the Webmaster Tools category, even though it’s more of a generalized rant against a lack of customer service and respectful negotiation.

We’ve been customers of 1and1 since 2005 or 2006 when we switched to their domain and hosting services. I’d be hard pressed to remember any missed or late payments in those 7-8 years, and we’ve remained loyal 1and1 customers throughout, despite the often difficult and counter-intuitive user interface.

But when our business needed to switch debit cards a few weeks ago, we were without a payment option for the space of about a week. A few things tried to bill us but were declined. Usually, we got an email about the declined payment, let the company know of the situation, and made the payment as soon as the new card was ready.

Not 1and1, though. They sent a letter threatening to freeze the account and even send us to collections! For $44.97!

I think two rational organizations can negotiate a late payment of $44.97 without getting collections and courts involved, right?

There’s almost nothing in this letter that I disagree with, in terms of the fact. Yes, we were late making a payment. Yes, 1and1 can cancel the contract. Yes, they can freeze the account and take all of our sites offline for days. Yes, they can sell our account to a collections agency and tack on another $18.95 if they want.

What I have a problem with here is the lack of respect that 1and1 shows for customers that have loyally supported them for nearly eight years. And it’s not as though we had ever had a history of late payments with them, or a history of attempting to steal their services without paying for them.

I might not even have a problem with a letter threatening a freeze on our account if it was unpaid. But a threat to send us to collections after single missed payment is simply overkill.

In fact, it’s enough to persuade us to leave 1and1 for good. Most of our clients’ websites are on HostGator anyway, which gives us and them an easier way to access… well, just about everything that we ever need to access to service their websites. And HostGator didn’t immediately send us what amounts to legal threats when our old card was declined for a few days.

What happens when 1and1 sends accounts to collections? Obviously, a $44.97 problem immediately turns into a larger one, with the $18.95 charge, plus whatever charges the collection agency is legally allowed to tack on. Also, the collection agency would be able to sue us and get a judgment. Both the collection and the judgment would appear on my credit report for 7-10 years, whether I paid or not.

And of course, if the collection agency was really nasty, and I didn’t bother showing up to a court hearing to tell them all of my income and assets so they could deduct their judgment from my bank account or something, they could ask the court for a “bench warrant,” which amounts to a day in jail for 1and1 debtors’ prison.

After working with enough low income homeowners and consumers on various foreclosure, real estate, and financial websites, I know that a threat to send to someone to a debt collection agency is really a threat of jail time, or legalized killing by a police officer for resisting 1and1’s debtors’ prison.

After being with 1and1 for close to a decade now, I’m really disappointed by their lack of communication, negotiation, and customer service skills. Rather than waiting for more than one payment to be declined or putting a temporary freeze on the account and then sending legal threats, 1and1 jumped straight to debt collection agency threats.

Ironically enough, I think I received this letter after we had made the payment on the account. So it was resolved even though our websites were frozen for a period of a weekend.

But no thank you, 1and1. I don’t know if your letter contained hollow threats or not, but we’re not intimidated by your threats of collections, with all that implies: lawsuits, judgments, hearings, bench warrants, jail, tasers, and guns.

I’m sure you can find others to pay for your services in the future, but we have too much respect for ourselves to continue being your client.

There are plenty of other web hosting companies out there who would be happy to receive our business, and who understand that sometimes payments are declined for any number of reasons (lost, stolen, expired cards), and will give customers the benefit of the doubt for at least a few weeks without resorting to threats.

[Note: Google is full of horror stories of 1and1 actually following through on its collection agency threats. I guess they weren’t hollow threats at all. Here’s one story, and another, and another, and another, and another.]

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