Dreamhost Busy Cleaning Up The Great Billing Apocalypse Of 2008

Dreamhost is busy cleaning up the mess after accidentally overcharging their customers by $7.5 million dollars due to a typo. The process is not going smoothly and we’ve been receiving a mix of complaints and praise.

First, a complaint:

You might be interested to know the situation is getting worse and customers are still being billed. In fact, they are not responding to emails/faxes from their customers regarding this issue…
DreamHost is incommunicado at this point and most users are left wondering whether their funds have disappeared to St. Petersburg, the Caribbean or Mexico…

And now some praise:

FYI, this morning I created a support ticket with Dreamhost’s support team (as recommended on Dreamhost’s official blog — http://blog.dreamhost.com/2008/01/16/the-aftermath) requesting a service credit for the NSF fees I’d received. I created my ticket at about 10am, at 11:30am I got a ticket from a CSR requesting I resend the copy of my bank statement that I’d initially submitted (which I did), and then at 2pm got an email stating that the credit I’d requested had been placed on my account. No muss, no fuss, no argument.

So I’d say that Dreamhost has been far from “unresponsive” on this issue. They’re clearly bending over backwards to resolve the problems they created, and I really think you guys ought to give them some props for it.

We continue to wish Dreamhost the best of luck compensating their users. They are obviously working very hard and are genuinely sorry for the error, so we’ll try not to get called for any late hits out of bounds.

Feel free to post your experiences with Dreamhost in the comments, or send them to tips@consumerist.com.



Edit Your Comment

  1. Buran says:

    I read the comments in their original blog and what’s really weird is that they seem to be getting flack for being lighthearted and not using the usual corporate-speak BS. You really seem to be damned if you do and damned if you don’t, because this blog seems to gripe when corporations use their typical tone, and when a corporation knows that people don’t like that and want to feel like real humans run things, people complain.


    I’d be more worried about having important bills bounce than something like that, and in fact I’d be HAPPY to feel like real humans were working on the problem.

  2. NoNamesLeft says:

    I dont understand how banks can carge them NSF fees when the individual didn’t authorize them to take out the funds in the first place. I think the bank should be on the hook for these and not dreamhost.

  3. MercuryPDX says:

    @Buran: I’d be HAPPY to feel like real humans were working on the problem.

    I think that was the issue. The initial post made it look like stoned high schoolers were working on it.

    It’s like a doctor sending you a singing telegram to tell you “that mole came back positive for skin cancer”. While some would be happy toe receive bad news with that tone, most would not.

  4. missjulied says:

    I have them bill a credit card – not my bank account – and the bill was reversed before it ever even showed up on my statement. In fact, I probably wouldn’t even have known about this if I didn’t read the Consumerist, as I never read their billing mails, just look for the correct amount on my credit card to show up at the correct time.

  5. ExtraCelestial says:

    The individual gave pre-authorization by enrolling in auto debit. It’s in the terms and conditions you agree to when you sign up.

  6. woogychuck says:

    I’m glad they were honest, but the tone was inappropriate. When I get charged 12 times what I’m expecting and my sites go down. I’m not exactly thrilled to see a picture of Homer Simpson as a response.

    There attitude has always been relaxed and a little off-beat, but this is the first time it seemed down right unprofessional. I’m also a bit frustrated that my bank account hasn’t been credited yet.

  7. Buran says:

    @woogychuck: It didn’t seem that bad to me. I don’t use their service, but I didn’t find their message offensive. Now, if you want to blame them for watching lame TV shows, that I’m right there with you on.

  8. Reading the details of the error, I guess I’m lucky my contract doesn’t come due until mid-2009. I haven’t seen any Dreamhost billing activity at all on my account, which is correct because I’m prepaid through the middle of next year.

    I could question their tone a little bit, but it’s definitely better than “taking it seriously” and then ignoring it like any of the companies usually featured here would do.

  9. mysticone says:

    @Buran: I think the problem is that they made it out to be a funny situation, but it wasn’t funny at all to the people who’ve had any number of problems due to the billing error. While I wouldn’t want a company to “take it seriously” and ignore it, I also don’t want them to act like it’s hilarious because they mistakenly overbilled my account by 12 times the usual amount. It’s not funny. At best it’s annoying, but definitely not funny.

    Based on this and other reports of Dreamhost’s inadequacy, I’m quite happpy that I’m not a customer of theirs.

  10. twothirds says:

    I saw this google advert the other day. The smart hosting providers are using this blunder as a great marketing opportunity:

    As a side note, I will be canceling my dreamhost account this weekend. The billing screwup is yet another example of a common dreamhost blunder. I have had lots of downtime and lost emails over the past year. It’s time to move to a hosting company run by adults.

  11. Trickery says:

    @mercurypdx: Yes, having a problem with your web hosting is exactly like being told you have a cancerous mole by your doctor. I can see how you might confuse that now. Next time use your credit card for billing purposes, which is much safer, or find a new host. Simple.

  12. JeffCarr says:

    @mysticone: Bah, I was affected by this, but I find it kind of funny. I’ve made that kind of error plenty of times myself, so I completely understand the kind of panic he was going through on Friday.

    Besides, the lighthearted post was on their blog. The status page had a professional explanation. I feel sorry for Josh myself. Although I admit that if I didn’t trust them to make things right, I might have a different opinion.

  13. not_seth_brundle says:

    @Buran: Maybe in isolation the tone didn’t sound too bad, but this wasn’t the only response. I think another thing that got people really riled up was that, on the official DH status page, they originally had the severity of the problem set at “Medium.”


    (They changed it to “High” after sufficient outrage was voiced.)

    This, PLUS the light tone, led people to think that they really weren’t taking this issue seriously.

  14. @not_seth_brundle: The funny thing to me is that I didn’t even read the blog post. Why? Because as soon as I noticed the problem, I went to fill out a support ticket, and they already has a message there. My problem was solved, and I didn’t need to look farther.

    It just seems silly to me that someone would get upset over the priority level set on the status page, but maybe some people got charged a lot more money than I did.

    At any rate, I get more upset when I have website downtime or email outage … which happens much more often than this billing error. Of course, dreamhost has always been quick to address any support ticket I take out. I give them a pass on a one time billing screwup.

    7.5 million is a lot of money, but it also shows how small dreamhost really is. I’d bet big box stores rip their customers off 7.5 million everytime they cough and accidentally double scan an item.

  15. dorksandlosers says:

    Crap like this is why I don’t do automatic billing.

  16. Xkeeper says:

    Overcharging everybody $7.5m in total is a big error and it’ll take a while to clean up.

    Personally, I’m just glad they’re doing it well. No complaints for it, and whining about the status being too low just seems stupid — if I was in a hurry to get something out, I would probably ignore all the extra option bullshit and click POST THIS RIGHT NOW several times.

  17. th30 says:

    The problem is no one at Dreamhost seems to be taking this seriously enough.

    When you give your Credit or Debit card information to a company for the purpose of automatic bill pay, you are expressing trust in that company and (at least de facto) committing to a long term business relationship.

    This Dreamhost fiasco is an example of a company making a mistake (which doesn’t in and of itself violate the relatioship) and then responding, at least initially, as if there is really no problem. Treating a problem as if it isn’t one is not only immature and counter-productive, it’s a violation of the client/provider relationship.

    I chose Dreamhost on the reccomendation of two friends who are also very web savvy. They sang Dreamhost’s praises. This mistake and, more importantly, the company’s response betray those reccommendations.

    I was charged four days AFTER the announcement that “It’s no big deal, refunds have already been processed.” I’ve sent an email and two support tickets in with no response from Dreamhost. The least they could do is have an auto responder with a note about what they’re doing to fix it and an estimate of how long it will take to respond to the customer’s communication. (A days-old announcement on the support page doesn’t cut it.)

    A non-response after such a MASSIVE problem leads very quickly to charges of FRAUD.

    Perception is everything, and communication is the only way to keep customers who feel SCREWED from getting very, very angry. (You wouldn’t like them when they’re angry.)

  18. Mr. Gunn says:

    Judging by the overwrought melodramatic reaction to pretty much every status message they post about anything, I don’t blame them if they’ve gotten a little deaf to the cries of “OMG you’re the worst host EVAR I”m switching tomorrow!!1!” Complaining about the tone of a blog post? Please…

    I got my refund notice later that afternoon.

  19. RDAC says:

    I use Dreamhost, and if you’ve ever seen any of their communications (or even internals, such as the 1-click install page or control panel) you know that the lighthearted communication style is M.O for them.

    I’ve been using paypal to pay my bill, so no banking info on file for me. They still sent the informational email about the situation to me though, and have been upfront about the entire issue.

    Overall, it’s refreshing to have that kind of response instead of playing the blame game.

  20. Krendal says:

    @Mr. Gunn:

    But have you actually gotten your refund? The charge hit my account two days after the notice of a refund. Said charge is now on my account which shows no sign of a refund. The tone of the blog post doesn’t matter to me, I like the irreverent blog posts, but this situation sucks and should have never occurred.

  21. rlee says:

    @dorksandlosers: Crap like this is why I have a per-account $ cap on each auto payment.

  22. MeOhMy says:

    Maybe they need two info outlets – one for people who like the snarky tone and one for people who prefer the serious tone.

    I work with a non-profit whom I believed had switched to Dreamhost so I sent them a link to the blog to make sure they were aware that this might have affected them.

    The response came back as basically “We never ended up switching to Dreamhost and after reading this blog post, I don’t think we ever will.”

  23. ladycrumpet says:

    Here’s my timeline:

    1/15/08 – Email received re: automatic rebill receipt dated 12/29/2008 which showed a double billing.

    1/15/08 – Date payment posted to my American Express credit card.

    1/17/08 – Date credit was posted to my AmEx account.

    I didn’t have to contact them, I received their email acknowledging the fuckup, and everything has been resolved. My feelings aren’t hurt, my finances are ok because I used a credit card. They admitted and fixed their mistake, and I’m going to keep using their services.