I know in-flight Wi-Fi prices have increased recently, but $300 for one cross-country round trip? That’s essentially what Gogo Inc. charged me recently. And I don’t want that happening to you.
If you’ve ever used Wi-Fi on an airplane, check your credit card bills. Now. The firm that dominates the U.S. in-flight Wi-Fi market — Gogo Inc. — seems to have a bad habit of charging consumers’ credit cards when they aren’t looking.
In my experience, Gogo even took my money when it was expressly told not to.
I asked Gogo twice to offer comment for this story. The firm did not respond.
You probably know the basic elements of the story I am about to tell. Everybody knows the credit card auto-renewal game and how lucrative exploiting laziness can be. Heck, America Online still has 2 million paying customers. But exploiting laziness is one thing. So is the “make it really difficult to cancel” game. But refusing to honor cancellations? That is quite another.
If you fly, you probably know that Gogo has raised prices dramatically. Good for them. I’m surprised it didn’t happen sooner. I find in-flight Wi-Fi very valuable. For a few bucks, I can turn a lost travel day into a productive day. So $10? $15? Even $25? Worth it to me.
On a flight in April, I was surprised to find the single-trip price had soared all the way to $30 – or $60 for my round-trip. But Gogo also offered a monthly subscription for $49. Great, I thought. I’ll do that, save $10, and cancel after a month. I knew I was entering a potential dragon’s lair. I knew Gogo priced things precisely to steer me in this direction, with the hope that I’d be lazy and end up paying for at least one month of service I didn’t need. I also knew that the fine print around canceling was a bit odd:
“You may cancel your monthly subscription at any time by contacting Gogo Customer Care (via phone:1.877.350.0038 or email: firstname.lastname@example.org,” it said, without an end parenthesis there. “If you wish to cancel your monthly subscription and avoid a charge for the next month, you must do so at least two (2) days before the monthly renewal date of your subscription. (The monthly renewal date is the same day of the month that you first subscribed). If you do not cancel at least two (2) days before the monthly renewal date for your subscription, but you do cancel before your monthly renewal date, contact Gogo for a refund. If you cancel after your monthly renewal date, you will be charged for the next month and your cancellation will be effective the following month.”
Here’s one brain twister: If you have to contact Gogo to cancel, why would you have to contact Gogo separately to get a refund if that cancellation is within two days or your renewal? I didn’t want to find out.
So I took all precautions. I set up digital reminders well before that two-day window to ensure I canceled the service on time.
Then, a few days after my trip, I set out to cancel. Naturally, canceling was harder than signing up, which itself shouldn’t be (but is!) allowed. There was no way to cancel on the website. So I initiated the requisite chat with a customer service representative who called herself Claire. (Why chat? Because I’d have an instant record of it. More on that in a moment.)
Claire tried, with aplomb, to convince me not cancel. (I had no other flights planned, so a monthly subscription to Wi-Fi that works at 30,000 had no value to me.)
“If you prefer, I could suspend your subscription for a month. That way you don’t have to re-purchase later,” Claire said. This is a clear setup, of course, with another chance to forget and end up paying for the service. No, I said, “Please do as I asked right now, Claire, and cancel the subscription immediately.”
After a back-and-forth, Claire relented.
But I know this game, and I planned for trouble. I asked for a confirmation code. I was told there was no such thing, but was promised a confirmation email.
“We’re sorry to see you go and look forward to seeing you back soon. I’ve cancelled your subscription. You’ll still be able to use it through 05/07/15, however, there will be no additional automatic renewal.”
That phrase “no additional automatic renewal” bothered me. But I know my rights, and I trust my credit card issuer (USAA) to have my back, and I didn’t know what other evidence I could gather, so I disconnected. I saved a copy of the chat transcript. And I got the email from Gogo.
You know the rest of the story. I also got five more $49 charges from Gogo. Oddly, I didn’t get a single email about any of them, though my inbox is otherwise crowded with Gogo receipts and notices.
When I called Gogo customer service to complain, the operator was polite, and said pretty quickly he would issue a refund, which I received within a week or so. And I asked, does this happen often?
“It does happen,” he said, though he said it was unusual. “It is people doing the work and we make mistakes.”
But was it really a mistake?
Earlier this year, Buzzfeed reporter Sapna Maheshwari wrote a story about Gogo and a strange feature of the firm’s subscription service. While Gogo sends a pile of emails to users, including a receipt for every one-time use transaction, Gogo does not send a receipt for monthly subscriptions.
Meanwhile, Maheshwari found consumers with the same experience as me, like this one.
“So much for the “no automatic renewal” after I contacted your rep to cancel. Credit card charged again,” wrote Thomas Underhill on his Twitter account earlier this year. (His Twitter account shows Gogo subsequently contacted him to offer him a refund.)
The logical question to ask is: How many consumers were charged monthly fees by Gogo and didn’t notice? We may find out.
GoGo is the defendant in a class action lawsuit about its subscription tactics. Both lead plaintiffs in the case complain that the recurring monthly charges were a surprise, and Gogo never sent receipts or notices about them. Earlier this year, a federal judge ruled the consumers could push ahead with their lawsuit, rejecting Gogo’s claim that the consumers had agreed to settle claims via a mandatory arbitration clause.
Why would Gogo do this? It’s important to note that while the firm hasn’t turned a profit yet, its revenues are growing. A growing portion of that revenue comes from subscriptions. From Buzzfeed:
“Gogo said it brought in about $133 million in revenue last year from individual sessions and $88 million from subscriptions, which together accounted for more than half of the company’s total revenues. In 2011, individual sessions, including sales of the nonrenewable 30-day pass, brought in nearly $51 million in revenue, compared with about $27 million from monthly subscriptions. ”
In other words, revenue from monthly subscriptions has more than tripled during the span, is growing faster than single-use revenue, and is obviously key to Gogo’s business model. But what portion of that revenue is genuinely earned vs. collected from confused consumers?
One of the main theories from my book Gotcha Capitalism is that there are entire companies, and sometimes even industries, that cannot be profitable without resorting to “gotcha” tactics. For a while, low-end DVD players came with rebates that made them essentially free — the firms selling them only made money when consumers screwed up the rebate paperwork, or more accurately, when the firms made filing for rebates intentionally difficult. For obvious reasons, such firms have a poor future. Eventually, consumers figure out the ruse and stop playing the game. Eventually, critical partners don’t want to be besmirched by the firms’ bad behavior. (I will certainly try to book on airlines like Southwest and JetBlue that offer a Gogo alternative going forward. Hear that, United and Alaska?)
Eventually, federal regulators are roused and take a look.
Companies can survive for a while on gotcha tactics, but not forever. The end usually comes quicker than many realize. If the firm can’t make money without taking it from people because they are confused, it doesn’t deserve to survive.
Gogo provides a real service that is very valuable to consumers like me. But I fear it’s not valuable enough for the firm’s business model, and that it is resorting to the automatic credit card charges game to stay aloft. I hope I am wrong, but if I’m right, the sooner the end comes, the better. Do your part — check those credit card bills. It’s a lesson we all need to learn, and re-learn, in our gotcha-driven economy.
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