FTC Investigating Auto Renewals.

Burried in this press release from Classmates.com  is a section stating the FTC is investigating Auto Renewals and if Classmates.com is forced to change this practice it could have a material impact on the business.  This will be a case to watch.

http://biz.yahoo.com/ap/071126/classmates_media_ipo.html

4 Responses to “FTC Investigating Auto Renewals.”

  1. Andrew Says:

    What’s with all the negativity from others about POF? Check out this post on mashable: http://mashable.com/2007/11/27/plentyoffish-growth/

  2. India Job Search Says:

    Without the auto renewal, classmates is kaput! It is still in web 0.50 in the web 2.0 world. Interaction with other classmates is so rigid, even after becoming a paying member.

  3. Francis K Githinji Says:

    That is actually a very good development in the field of web internet marketing.

  4. Zak Kinion Says:

    Most subscription based services in general, whether its paid dating sites, porn sites, webcam sites, or stuff like classmates is based on the fact that people are generally passive/lazy and forget to cancel. Credit cards/cell phones, and just about everything else works like this. Would credit card companies make any money if everybody paid their bill on time every month?

    I’ve had webcam/porn sites where people would sign up for a small 4.95 trial, and it would rebill to 30-40 monthly. A surprising number of people would rebill. Paid dating sites have to be even worse, as canceling the site gives a sense of defeat to a person, and it is easy for the human mind to rationalize staying in there.

    Even in the brick and mortar world, like a gym membership, 80-90% of the people don’t go after 2 months, but continue paying past the contract end date.

    The human brain has a lot of bugs in it. We’re still geared to a small tribal society where we mostly worried about staying alive. That’s because we lived that way for tens of thousands of years, and have only been modern for hundreds. I think most success in business is simply adapting our brain and way of thinking.

    “Investigated by the FTC” doesn’t mean much in and of itself. If they did get sued, it would be for a relatively small amount and would not scuttle the company. I myself have been a victim of the FTC, and it was a horrendous experience at the time, but now I’m fine and doing very well.

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