Dreamhost Is "Very Very Sorry" For $7.5 Million Billing Error

Dreamhost would like you to know that its very very sorry for accidentally billing its customers $7.5 million it wasn’t actually owed. You see, someone typed 2008 when they really meant 2007 and their billing system decided to charge all of their customers in advance for the entire 2008 calendar year. This included debiting huge amounts of money from people’s checking accounts and all the “worst possible scenario” situations you could possibly imagine.

Tom, friend of the blog, and master of the internet, was among those affected:

Well, this morning I got a billing email from them:

This is just a notice that your DreamHost [redacted] (“zug’s Account”) has a balance of $380.87 (including any charges not due until 2009-01-14), with $340.97 due (since 2008-12-14).

You also have $321.02 past due (owed since 2008-11-14), and if by 2009-01-14 you do not pay at least the $321.02 part, your account will be automatically suspended until payment is received.

Ok, that’s confusing… WTF, I ask myself. Looking farther into things…

WHAT DO YOU OWE MONEY FOR?

We have the last payment on this account to be $12.46 on 2008-01-15 06:48:38.

Since then the following charges have been made to the account:

2008-01-18 – $19.95 for “CODE MONSTER!” through 2008-02-17.

2008-01-18 – $19.95 for “CODE MONSTER!” through 2008-02-17.

2008-02-18 – $19.95 for “CODE MONSTER!” through 2008-03-17.

2008-02-18 – $19.95 for “CODE MONSTER!” through 2008-03-17…..

It turns out that Dreamhost is really, really sorry.

From Dreamhost’s blog:

I’m very very sorry, we’re very very sorry, and I’m sure you’re very very sorry this happened. I really am. I understand the sort of problems that an unexpected large charge to your credit card (or worse yet, your debit card) can cause. If the tone of this blog post seemed a little light, I apologize I don’t mean to offend and I realize how serious an issue this is. I’ve been up since 3:50am trying to undo the damage and maybe I’m a little shell-shocked.

A new service is running right now (in parallel on all the controllers) that fixes all those future charges, re-enables your account if it was erroneously suspended, and if your credit card was automatically rebilled, refunds the payment automatically. You don’t have to contact us or your bank, and you’ll get an email when your account is finished fixing up. It’s going to take several more hours to complete. There are (or were, after this incident) a lot of you these days!

If, because of this billing mistake, you somehow incurred some fees from your bank or credit card company, please let us know after tomorrow (today we are just replying to all 10,000+ billing messages with a generic explanation) and we’ll do our best to make it right for you.

As Tom points out, an apology is probably small consolation for people whose mortgage payments bounced because of this bug. We wish Dreamhost the best of luck compensating their users.

Dreamhost fucks up bigtime! [ScatteredGenius]
Um, Whoops. [Dreamhost Blog]
Billing Issues (846 comments) [Dreamhost Status]

Comments

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  1. weakdome says:

    Nice to see they’re sorry, instead of taking it seriously!

  2. Colin says:

    Let this be a lesson to you:

    This is why you should use credit cards not debit cards for these sorts of charges. And always turn off the “feature” where they will charge you a fee if you go over your credit limit. One could simply report the charge as fraud and never pay a dime. And if you were nearing your credit limit, the charge would just fail.

  3. pat_trick says:

    I saw the attempted charge for my DreamHost account for 2009 this morning (fortunately for me, I had an expired credit card listed on my account), and was about to contact them when I got this email:

    “Hi [me]!

    Ack. Through a COMPLETE bumbling on our part, we’ve accidentally attempted
    to charge you for the ENTIRE year of 2008 (and probably 2009!) ALREADY
    (it was all due to a fat finger)!

    We’re really really realllly embarassed about this, but you have nothing
    to worry about. Please ignore any confusing billing messages you may have
    received recently; we’ve already removed all those bum future charges on
    your account (#XXXXXXXXXX) and fixed everything up.

    Thank you very very much for your patience with this.. we PROMISE
    this won’t happen again. There’s no need to reply to this message unless
    of course you have any other questions at all!

    Sincerely,
    The Foolish DreamHost Billing Team!”

    I do really like their service; they’re quick to respond to support inquiries and outage notifications. Good on them for fixing this one right away.

  4. UpsetPanda says:

    @weakdome: I was just going to say, ‘they’re not taking it seriously!’

  5. gondaba says:

    Dreamhost is officially a goner.
    Once A giant hosting company, now a giant turd.

  6. AlteredBeast (blaming the OP one article at a time.) says:

    Stuff your sorrys in a sack!

  7. asscore says:

    You can always move to westhost! They are my favorite hosting company… and i’ve tried dreamhost, bluehost, total choice, visi, hostik, and more i cant even remember.

  8. evslin says:

    I’m glad I manually pay my hosting bill with them each month via Paypal. That snafu would not have broken me financially if I had been paying right out of my bank account, but I still would not have been a happy camper about that.

  9. Snorbert says:

    I learned a major lesson on how to conduct business today. If you screw your customers, make a blog with stupid jokes and a Simpson’s picture and all will be well.

  10. TechnoDestructo says:

    Apparently it didn’t affect everyone, because I have gotten no such charge. Yet.

  11. plaincorgi says:

    I also received an email this morning along those lines. Thank goodness that the card I used to pay last year is no longer in service.

  12. Quellman says:

    I like how they implied they would cover the costs you incurred from the bank if their error causes an overdraft.

  13. Jaysyn was banned for: http://consumerist.com/5032912/the-subprime-meltdown-will-be-nothing-compared-to-the-prime-meltdown#c7042646 says:

    @asscore:

    Sitelutions FTW!

  14. woogychuck says:

    It’s nice to see that they have such a serious tone. My mortgage payment gets taken out of my account on the 15th of every month. Hopefully that doesn’t get denied because Dreamhost overdrafted my account.

    I’m sure GMAC will understand that my payment was late because I needed a web server for my blog.

  15. Coelacanth says:

    Ehh, got one of those bills this morning. That explains it. I feel sorry for the poor guy whose credit card *was* billed (the account was issued to a non-profit I used to work with.)

  16. plaincorgi says:

    I just checked again and I actually had an active card on the account. Argh, now to make sure that it’s refunded

  17. boxjockey68 says:

    I use USM Hosting, they are AWESOME, this would never happen with there. I have never had any kind of problem there with them.

  18. stroszek says:

    I understand the comments about their tone, but that’s the way all of their communications are. That’s the character of the company. At least the acknowledge the problem openly and explained what went wrong and how it’s being fixed. That’s a lot more than a lot of companies do.

  19. mammalpants says:

    in defense of Dreamhost, they are really great and are the epitome of great customer service! they have ALWAYS been the most responsive, helpful and humorous group of real people ive had to deal with. i have hosted with them for almost 10 years and they have grown larger and larger every year and not lost a single ounce of their great customer service.

    my gf got billed $300 today and they were VERY quick to respond to her inquiry and they credited her card. this has never happened before and i think we should not be so quick to jump the gun on this one.

    my experience with them has been great for many many years.

  20. bkpatt says:

    I’m a small portion of their $7.5 million screw-up. I’m usually pretty tolerant of these small aggravations, and this is no exception. I received the e-mails at 3:39 AM, and forwarded them to billing@dreamhost.com at 7:21 AM asking for an explanation. My account is rebilled yearly, and was paid in full until December 2008. I was re-billed my annual charges twice – once again for 2008, and for 2009 (which would have billed in 12/08).

    A quick check at dreamhoststatus.com let me know there was a larger issue, and I had a personal e-mail response by 2:00 PM today. The charges still haven’t hit my card, but they have promised to credit back anything billed ASAP.

    I think some dude named Josh screwed up, and they are definitely ribbing him about it quite a bit, while making him fix his mistake. If they don’t have this straightened out within a few days, then my frustration level will rise a bit, but it’s a wash right now.

    I don’t understand people who allow auto-draft from cash accounts that house their critical funds. Online billpay is nearly free at every bank these days, set it up and then use it when the bill comes in. It gives the opportunity to review the bill for accuracy, log in, type the amount, click Pay, shred bill. Done. It’s automated enough to not be a time/money waster, and not so automated to completely FSCK you because somebody else decided to be a tool today. If it’s a bill you can’t use bill-pay on, then have 2 accounts – one for critical and one for other spending/cash withdrawals/etc. This is not only smart management to keep a lock down on crucial funds, but also helps with budgeting.

    This situation should never happen, but it’s going to – understand it and make your situation be resilient to it. If it never does, you have expended little effort for lots of peace of mind… if it does, you saw it coming, worked around it in advance, and continue to expend very little effort for lots of peace of mind.

  21. Ashground says:

    Yeah, got a bill this morning. Thank goodness I didn’t have things set up to automatically deduct.

    I don’t expect Dreamhost to disappear overnight. They’re huge. That said… I’ll be backing up everything I have hosted there tonight.

  22. forever_knight says:

    why do people use debit cards?? or auto-deduct any non-serious payments from checking accounts??

    credit cards people. credit cards.

  23. jonnypage says:

    My Credit card also got billed, and as they promised, will be credited. I bet I see the charge and the credit processed on the same day in a few. Everyone makes mistakes, and they have been very open and transparent as to what happened. Plus, everyone who has a site hosted with dreamhost knows from their newsletters that they aren’t the most serious bunch when it comes to PR. They however, are the most serious bunch when it comes to stuff like this. I bet at dreamhost offices the shit hit the fan hard.

  24. HyperWrench says:

    I guess I got off lucky seeing as the credit card they had on file for me was the remains of a Visa Travel Card left over from a vacation and the transaction failed.

    The thing is that if I had not gone to the DreamHost site to figure out how I was able to receive a bill from the future I probably wouldn’t have had know what the heck was going on. Still haven’t received any info officially from them notifying me of any problems.

  25. DallasDMD says:

    @boxjockey68: Why would this never happen there?

  26. Mr. Gunn says:

    I got one of the “bills from the future” and send it right back with a WTF note. I only pay a tiny amount and it’s on my CC, and when I looked at the billing page, it showed the right info, so I wasn’t too worried.

    I do hope a bunch of the “OMGWTF!1!one!11! TEH SKY IS FALLING!!” people who are always bitching in the comments finally leave and reduce the load on my shared server, though.

  27. chiieddy says:

    While I’m not thrilled $340+ got charged to my credit card, I know better than to put a debit card on an account with an auto-renew option. Think about it. What did tick me off was they were making jokes about it. “Oops, my bad.” People are not amused.

  28. Bakachan says:

    I don’t think I could be any angrier than I am right now. I’m basically a starving artist, so the $280 they tagged me for this morning is a lot. But I’m not angry at Dreamhost. Not even a little bit. Feces occur.

    I am angry at all the self-righteous assholes who are MONUMENTALLY cunt-hurt over this. Is it a huge and terrible fuckup that is going to cost people money? YES. Is Dreamhost doing everything they can to fix the problem? YES. What more is there?

    The Dreamhost Status blog post is full of comments threatening legal action, or saying they’re leaving Dreamhost… For what? You’re not going to find a better host for THREE TIMES THE MONEY. Companies are run by people, and occasionally people make mistakes. There was no malice involved. Shit happens. Even the banks and creditcard companies make mistakes sometimes.

    Every single argument these assholes make is ridiculous. Bottomline: Shit happens. Unlike a large chunk of Corporate America, DH is doing their best to fix things, and they say they’ll make it right, whatever it takes.

    And to the people complaining about the nature and tone of the blog posts… I guess you never read your fucking Dreamhost newsletters. These guys couldn’t be serious at a FUNERAL if it were THEIRS.

    Complain when they don’t fix it. Until then, I still stand by my choice to host with DH for the past three years, and it pains me to think that DH is going to take a massive hit no matter what just because people think they live in a goddamn bubble where nothing can happen to them.

    Hell, I always pay with a Paypal one-time-use virtual card number, the only reason this got me is because it hadn’t expired yet after I paid for a new domain.

  29. Mr. Gunn says:

    Bakachan: I’m willing to bet that the majority of those making the most noise are just trying to get a month or two of free hosting as an apology.

    Actually, what I first thought when I got the bill was, “Guess I shouldn’t have posted those large jpegs of the snorg tees girl to Fark.” As it turns out, that resulted in only about 8GB of traffic for the past weekend.

  30. MrsMicah says:

    @forever_knight:

    Actually, some people were put over their credit limits, lost their rewards points, and had their rates raised. Will they get these back? If they’re lucky.

    As it is, I don’t trust anyone with automatic billing. This was pure human error (annoying, dumb human error which hasn’t been dealt with too well) and I’m sure it could happen at other companies too.

  31. viqas says:

    at least they said that they were sorry. No company does that, not even microsoft for their messups (im looking at you vista).

  32. SarcasticDwarf says:

    @Bakachan: Precisely. It was a major screwup and they are doing everything they can do fix the problem as fast as possible. What would have happened if this was a major corporation? I would bet you that the response would be that your account would be credited back in X days/weeks. DH instead (appears to have) credit things back immediately. What more can you ask for?

    And for those that had their mortgage payment fail because of this or went over their limit, I have no sympathy. You always need to plan on mistakes happening. Sh*t happens, deal with it.

  33. JeffCarr says:

    I’m very happy with Dreamhost, even with this problem. I’m definitely not worried that they’re going to do it again. Far from it. I know I wouldn’t want to be Josh right now though…

  34. Michael Belisle says:

    How does today’s bounced mortgage check push the guy into 30-day-late territory? Did he just wait until 29 days after his payment was due to send in the check?

    I’m not sure I have sympathy.

  35. Trick says:

    I went to WestHost from DreamHost… best decision ever on web hosting.

  36. joellevand says:

    I use DreamHost — even with the automatic payment feature (which I use — all my bill paying is automated, if I can help it) you can set a cap of how much you are billed. My cap is one month’s payment for just this reason. Checked my credit card this morning and just now, and knock on wood, all is well.

  37. goodkitty says:

    As someone who makes mistakes all the time, I can throw no stones. +1 for them at least not having a faceless, emotionless corporate-speak BS reply about it.

    (And anyone who doesn’t have enough money in their account to cover the mortgage payment and some rainy-day money should seriously re-think either having an expensive mortgage or having an internet site.)

  38. floydianslip6 says:

    I gotta say, what a HUGE mistake… but it really seems like they’re doing everything they can to make it right. What more can you ask? Sometimes mistakes happen it’s nice to see that they’re making a good PR push through the blog to try and fix everything.

  39. ExtraCelestial says:

    @c.bartlett:
    More like let this be a lesson to stop relying on companys to automatically debit your life. Seriously, I’m part of generation y. I get it. Everything’s a rush. Everything’s streamlined. Take two minutes, log on and press send. Doing mundane boring tasks is part of being an adult damn it.

    ps- I personally think Dreamhost handled this disaster beautifully. Other companies take note.

  40. cronick says:

    Hey, come on you guys. They IMMEDIATELY replied to my email and refunded the money with a sincere apology.

  41. Xkeeper says:

    I’m honestly amazed at all the hate here. They screwed up, they publically admitted it, they’re going to refund any fees/etc it caused…

    This is the perfect reaction to this kind of screw up and yet they’re still getting shit on for it?

    Good God, the Consumerist commenters can’t decide which half of the problem to blame!

  42. Firstborn Dragon says:

    Well, it’s nice to know HERE WTF happened. All I got was that it was an isolate error. I never realized it was a massive issue. By the time I woke up and got on the PC, my business CC had been charged, and refunded.

    Even if it takes a few days, no big deal the refund will be on my card before the billing cycle is over.

    I was planning on taking the card off the site, not because of this, but because the website isn’t working out for what I needed it for. Unless things change by the next time I’m billed, I’m just going to let it laps.

  43. gramzon says:

    Ugh I can’t believe people are getting so riled up at this, as if a billing error never happens.

    And honestly, if a Web host bill has the same priority as your mortgage bill, something isn’t right on your own behalf as it is.

    DreamHost has always had my backing thanks to their transparent operations and quick support. Move or suggest a host that “would NEVER have an error” as you may, I still think that this has been handled as well as it should be.

  44. meballard says:

    Even the tone of their posting told me they were taking it seriously, and fixing it as fast as they could. When I read it, I knew how they felt (and what they were thinking when they wrote it, the oh crap thought, I work in IT, I know it well). Anyone can make mistakes, proactively fixing it and apologizing is about as good as you can get, especially if they really do everything they can to make it right (pay fees people incur, etc).

    On the automatic payment thing, if you can’t afford/take a bit of an overcharge, then you should be doing an automatic payment. If things are that tight for you, you should be managing your money tightly to make sure problems don’t happen. Personally I use automatic payments for everything if I can, but I also scrutinize my accounts (usually multiple times per month) to reconcile against my PDA’s record of purchases, and if I get hit with a false charge (even one that is in the $10,000+ range), it’s not going to cause any problems on my credit card.

  45. dantsea says:

    Oh my god, what a bunch of fucking highchair pounders. A mistake was made, acknowledged, and corrected. Get over it, or perhaps you’d like some Tucks Pads for your unrelenting butthurt?

  46. oldnumberseven says:

    I like dreamhost. They have always treated me nice. They made a mistake and are correcting the mistake. Many people thought the dreamhost response was flippant, and I am sure they will lose a few customers over that. I thought the dreamhost response was much better than the ‘We are taking this very seriously…’ boilerplate. Also, much better than ignoring the problem until the problem snowballs. I haven’t seen a recall for webhost providers, but I have seen plenty of companies refuse to warn consumer until forced to do so, or issue a recall until forced to do so.

    For those whose accounts were ruined by this, I would recommend an American Express One account. Good perks, and no pre-set spending limit.

  47. bonzombiekitty says:

    A response to a mistake like this makes me MORE likely to use dreamhost. A mistake was made, quickly corrected, and an apology issued. Really, what more do you want? Sounds like good business practice to me, even if the communications are “unprofessional”.

    I like the “oh s*&@* we messed up big time. We’re so sorry. We’re correcting the issue as quickly and if you had other problems as a result of our error, contact us and we’ll work to fix that too. Again, this was totally our fault. We completely messed up. You have no idea how sorry we are. This will NEVER happen again.” types of apologies. To me it gives you a human face, makes it seem that you are truly sorry and understand the gravity of the mistake and not just issuing a cover your ass apology.

  48. MattO says:

    i had this happen to my acccount too…and upon emailing them, got the “im sorry” email back. i appreciate the fact that they let everyone know their mistakes, and were honest about what happened. A+ for them.

  49. aka Cat says:

    I got one of these billing notices. The first thing I saw was that I was “past due” since a future date. Then I noticed that the dreamhost status page said that they were working on a billing error.

    I feel bad for anyone who had checks bounce, but honestly, why set up an autopayment on a checking account for webhosting? Leave that for the critical stuff — like the mortgage — and if you must autopay your webhost, do it through a credit card.

  50. ladycrumpet says:

    I’ve had a Dreamhost account for some time and I’ve been happy with them. I got the billing messages and noticed the date discrepancy and the double billing. I was concerned, but not enough to panic. I use a credit card for my annual payment – I don’t understand why people would link a debit card for payment, especially given how many problems can happen.

    I couldn’t log into my account to check on the payment, but I also know to check [status.dreamhost.com] to find out what’s going on. I also received a follow-up e-mail letting me know what happened, so I feel like I’ve been kept in the loop. Yes, it’s a huge mistake, but I feel they’ve been handling it well – they acknowledged the mistake, they’ve apologized, and they’re working to undo the damage. As for the jokey tone – it’s no different from the rest of their newsletter updates, but I also know they’re still taking it fucking seriously. This is one company I feel happy to do business with, unlike all the other ones who make me jump through all kinds of hoops when I need assistance.

  51. Craig says:

    There’s no excuse for something like this happening just because somebody entered an incorrect date…Dreamhost’s billing system should have failsafe measures that flag a situation like this before the actual billing occurs. It’s unbelievable to me that people are such Dreamhost fanboys that they would consider something like this to be even remotely acceptable. This has class action lawsuit written all over it.

  52. bkpatt says:

    @Craig: What an insightful post… If you actually read anything about the problem, Dreamhost acknowledged the problem of future-dated billing and has said they will be making a change to not allow that in the future.

    You are another example of the sue-first, ask-questions-later culture that is clogging up court systems and wasting tax dollars by the truckload. The $7.5 million dreamhost screw-up is at least being refunded, the money wasted by morons who demand entitlement for being the least bit inconvenienced is gone for good.

  53. dantsea says:

    @Craig: What would the “class action lawsuit” be based upon, in this instance?

  54. Hogan1 says:

    @Craig: Perhaps you live in some sort of utopia where technology and people never fail. Class action…lol. I’ve had Dreamhost for years and they always admit their mistakes and take action to correct them immediately. I’ve never had any billing issues with them. In any case, if you set up a debit card (Or a credit card close to its limit) for anything that auto bills…Thats just asking for trouble.

  55. UnnamedUser says:

    Heh,heh. Happy Dreamhost customer here. Very happy. I manage several accounts for self and others that are hosted at Dreamhost. I’ve been a Dreamhost customer since 2002 (about).

    Yup! Dreamhost screwed up. They do that from time to time. Caca Pasa, as they say.

    The good news is that Dreamhost owned up to it right away and did what was necessary to fix it.

    A little story, if you please. I have “rescued” more than a few domains from incompetent hosting companies, webmasters (using the term very loosely) on behalf of others in the last few years. Everything from billing nightmares that make Dreamhost’s fubduck look like pennies to webmasters simply walking off the job while holding their customers’ domains in their own name and not paying the hosting company’s and/or registrar bills to hosting companies simply disappearing completely. Some of these “rescues” take weeks to get sorted out.

    Of all the shared hosting companies I’ve dealt with, Dreamhost is the best of the lot. Dreamhost are not better by a little bit either, they are orders of magnitude better. They are transparent with their operations and online status. Their prices are not the cheapest, but very competitive with similar companies and lot cheaper than some bigger companies. Their stuff just works. … When it does break, they fix it quickly, then tell you what went sour and what they will do to keep it from happening again.

    Shared hosting is a very competitive business. Many people have unreasonable expectations for shared hosting. Five-Nines is just not something you can expect for under $10/month. If you need Five-Nines, then expect to pay more than an order of magnitude more per month. Then you can holler.

    Happy Dreamhost customer, indeed.

  56. amccoll says:

    It looks like they took the measures to correct their billing issue. The people on the billing team are, in fact, human. How many people here have already put down 2007 instead of 2008? It was acknowledged, corrected, and people still seem to think that anything they put money to should be fail-safe. Wake up, nothing in life is fail-safe. Good job, Dreamhost!

  57. Craig says:

    @bkpatt: I’ve filed a lawsuit once in my life, for medical expenses as the result of a car accident. (I’ve had plenty of opportunities to file other, frivolous ones.) You are another example of passive consumers who have come to accept substandard company practices as the norm, thereby assuring us all that sites like this will never run out of content.

    I’ll say it again…there is no excuse for such a massive misbilling given standard failsafe procedures that should be in place in any company. One or two customers misbilled is one thing. This is something completely different.

  58. FullFlava says:

    It blows my mind how quick you all are to just roll over and take it and then defend Dreamhost for a fuckup of this magnitude. Regardless of whether or not they’re fixing the problem, there is absolutely no excuse for having a vulnerability like this in their system. I know nothing’s failsafe, but allowing a single missed keystroke to wreak this much havok is unthinkable for any kind of serious business.

    If this were any other company who handled it with a press release instead of a funny picture and a bunch of jokes, you’d be screaming to sue them, out their CEO, and shut the entire company down. Just because they’re internet geeks like you who post funny pictures on their blog doesn’t make them any different from any other large company out there. They’re not your friends, they’re a business.

    I understand that people shouldn’t be auto-debiting payments, that’s common sense, but to imply that the huge problems people have incurred from this error are in any way the customers’ fault is just unbelievable to me. It really is amazing to me how quick nerds will rush to the defense of companies that fuck them over repeatedly; see also: video games and computer hardware manufacturers. “Wacky” ads do not excuse shit like this.

  59. dantsea says:

    @FullFlava: A one-time mistake is forgivable, a pattern is not. If Dreamhost starts autobilling screwups on a regular basis, I promise I’ll start screaming about it.

  60. FullFlava says:

    @DanB:
    Thanks :) I think the thing that really rubbed me the wrong way about this story, which I’ve been following on other sites since yesterday morning, is that there wasn’t even a notification e-mail sent out to customers to let them know about the error.

    From Digg:

    No email, no headline on their front page, just a little red post-it thing on their support contact form (visible only to customers) and the issue on their dreamhoststatus.com blog, which mostly only customers know about.
    […]
    Absolutely NO mass email to inform subscribers of the error. You have to go to their site to see that they’re gonna fix it. This is INEXCUSABLE. How about folks with email but not internet access (ie, cell phone or something)? They’re gonna be flipping out.

    It’s nice that they have time to update the status page with a picture of the guy “at fault”, but cannot send us all a message saying it’s being taken care of.

    Where’s the checks-and-balances? Weak.

    Wow. Could dreamhost handle this any more poorly? Just like everyone else I received an email this morning saying that I owed money for a years worth of service. I actually thought I had done something wrong since I had been managing domains the day before. It wasn’t until I clicked went to the support feature that I discovered there had been a problem.

    If they were aware of the problem why didn’t they send an email to every customer as soon as they found out? I expect compensation for this total disaster.

    That’s just ridiculous. I’m glad they could find a funny Simpsons picture for their blog, but it’s fucked up when a company is more concerned with being “zany” than actually letting their customers know what’s up. Dreamhost is a bunch of amateurs.

  61. dantsea says:

    Huh, odd, since the first I heard about any of this was an email from the company announcing their screwup and that it was being taken care of. Understandable that people who didn’t see that right away would be upset, though.

  62. dantsea says:

    Email arrived at 2:28pm Pacific on Tuesday, that is.

  63. FullFlava says:

    @DanB:
    Not tryin to rag on you or anything, but their now-infamous Homer Simpson blog post was made at 9:52am. Waiting until that much later in the day to notify customers is not cool. We’re talking most of a work day; lunches, gas fill-ups, Starbucks, and all sorts of other things that no doubt incurred more and more overdraft charges for people who, y’know, didn’t expect to have hundreds (or thousands) of dollars debited from their accounts without their knowledge.

    The bottom line is that they should have notified their customers directly as soon as possible, if only to say “we know there’s a problem and we’re working on it.”

  64. gerasimatos says:

    Hello,

    As a previous employee of DreamHost and shift manager of their Graveyard Team I can advise you that billing errors within the company are nothing out of the ordinary, suffice to say I was not very shocked when I read there was a 7.5 million dollar billing error. The DreamHost billing system is far from “robust and stable” as Josh Jones proclaimed on the companies web blog, the only thing that could be counted on is the constant issues that have plagued DreamHost for the past few years. Billing issues are quite common with their company and the “fat fingers” he refers to having have led to countless mishaps causing customers downtime and other costly consequences.

    As a matter of fact, I am actually the head of a class action lawsuit “Gerasimatos vs New Dream Network” in regards to DreamHost not abiding by the California Department of Labor regulations for paying employees overtime for working greater than 8 hours daily, and also for illegally deducting vested wages for sick and vacation time. I became a whistle blower on DreamHost and shortly after the DLSE contacted the DreamHost owners I was terminated for “doing the right thing”.

    Here is the exact letter the DLSE representative sent DreamHost prior to my termination for engaging in protected activities with the DLSE.The law firms participating in the Class Action suit are as follows.

    [www.coviello-law.com] and [www.duvel-law.com]

    Thank you,

    Nicholas Gerasimatos

    Dallas Kashuba and Josh Jones:

    I am a retired Senior Deputy Labor Commissioner who was asked to return to assist in answering queries that come to the Division of Labor Standards Enforcement from the public concerning California Labor Law. One recent query had to do with alleged practices of your business. I do not know if the query originated from an ex-employee, current employee or friend of somebody who knows your business practice(s). This response is informational in hopes that your business practices do not generate future wage claims and additional liability for your business.

    It is alleged that you offer both sick leave and vacation leave as benefits of employment. It is also alleged that in the case where an employee takes sick leave and does not have enough sick leave time accrued, that you deduct double the excess number of hours from that employee’s vacation leave bank. The example give was that if an employee had two hours of sick leave on the books and took a day off “sick” (a total of 8 hours) then you would deduct the two hours from the available sick leave and 12 hours vacation (double the 6 hours necessary to cover the absence). If this is a factual representation of your policies, you are incurring a great deal of liability.

    Labor Code § 227.3 protects vacation hours as vested wages. The California Supreme Court in the case of Suastez v. Plastic Dress-Up (1982) [31 Cal.3d 774, 647 P.2d 122, 183 Cal.Rptr. 846] unanimously ruled that under the provisions of Labor Code § 227.3, vacations are earned day by day and any unused vacation must be paid on a pro-rata basis to the employee at the time of termination. The California Supreme Court concluded as follows:

    “The right to a paid vacation, when offered in an employer’s policy or contract of employment, constitutes deferred wages for services rendered. Case law from this State and others, as well as principles of equity and justice, compel the conclusion that a proportionate right to a paid vacation vests as the labor is rendered. Once vested, “the right is protected from forfeiture by § 227.3 on termination of employment, therefore, the statute requires that an employee be paid in wages for a pro-rata share of his vacation pay.”

    Vacation wages, being vested as earned, cannot be taken from the employee; they must be paid. Therefore (back to the example) taking an additional 6 hours of vacation hours from the employee’s leave bank is a failure to pay for the hours that were vested. This is cumulative and affects every current and prior employee that has had excess vacation hours deducted from their leave bank. A particular quirk of the protection is that there is no violation of the statute until such time as the employment agreement is severed (termination or quit); when payment of final wages becomes due. If the illegally deducted vacation hours are not paid at the final wage rate in accordance to the applicable statue (either Labor Code §§ 201 or 202), the employee has the basis to file a wage claim against you for not only the vacation hours owed, but for penalty wages under Labor Code § 203 (for up to an additional 30 days of wages at their final wage rate).

    I have advised the party that queried the Division of unlawfulness of the deduction and suggested that they have the basis of a wage claim if they were an employee of your business and had the hours deducted or would have such a claim if they were a current employee and such wages were not paid when the employment relationship ends.

    Please note that business that combine sick leave and vacation leave into some form of “paid time off” or “PTO” such hours would be entitled to the same protection as vacation wages under Labor Code § 227.3. Certainly you do not owe wages to employees for work not performed; you are within your right to deduct (hour for hour) any absence from the wages owed that were not worked (time off without pay). You could deduct (hour for hour) from the vacation hours (so long as the employee is paid for these hours on their regular pay check). I would strongly suggest that such hours are reflected on the wage earning statement as something other than regular wages (either sick leave or vacation hours, as is applicable). The only issue with your policy would be any deduction of vacation hours that were not paid.

    You may access the Labor Code from the left side of our web site at http://www.dir.ca.gov

    The foregoing has been provided for informational purposes only and does not constitute legal advice. Information contained here may not be relied upon or used as an official opinion of the Division of Labor Standards Enforcement ( DLSE ) in any forum. Access to, transmission or receipt of, or reliance upon this information from the DLSE does not create, and is not intended to create, an attorney/client relationship between you or any other person and the DLSE or between you or any other person.

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