The new business model: Intentional billing errors


Just in the last month, I had to call a bank to reverse four erroneous "Account Maintenance Fees" across two different accounts. It appears that intentional billing errors is the new business model for our struggling economy. (For the record, although I am responsible for maintaining these accounts, I did not open the accounts at the bank in question. My personal account is at a credit union.)

One of my friends remarked, "I got only two. They must not really be trying yet."

Many years ago, back when the dot-com bubble appeared unpoppable, a different friend of mine happened to meet somebody who sheepishly admitted that one of his previous jobs was at a what-we-can-euphemistically-call "adult online entertainment" site, where he was responsible for developing algorithms to determine which customers could safely be double- or even triple-billed.

Comments (16)
  1. Raphael says:

    I don't know how long ago you wrote this article, but nowadays we can add illegal foreclosures to the list.

  2. Andreas says:

    The "adult entertainment" double-billing algorithm has an additional component. The key isn't just locating "victims" to overcharge, but the fact that these charges has a description/company name/something the people at the bank could see that would make it very clear what kind of entertainment the customer was paying for. Thus it could be quite embarrasing to call the bank and fix, and many people would not bother for minor charges.

    I have been told that this was/is a component in the scam were you get the first month free by verifying your age with a credit card, and subsequent months is a 10$ recurring fee or something (written in small print in the TOS of course). Ideally you'd get a high conversion rate of people trialling your service becoming paying customers this way.

  3. James Schend says:

    AOL still does a lot of business with the "people who think they need AOL to get Internet, even though they already have broadband" demographic.

  4. Bob says:

    I have an "account transfer fee" on a statement from an MD that needs to be removed. It appeares in the middle of several charges for various dates of service. It is a group practice, but I've seen the same MD every time I've been there for an appointment, so I have no idea what they think they are transferring.

  5. Hardly new; hardly limited times of economic difficulty.

    An old dodge is to read obituary columns to find recently deceased people.  Send their family a bill for pornographic materials delivered but not yet paid for.  This worked pretty well for a certain scammer until they sent a bill to a widow of a blind man.

  6. steveg says:

    @Chris B: sort of related: guy I worked with got a call from the bank, "Hey, would you like to invest that million dollars you've got in your account?" He quickly popped into work to deal with the test records that had somehow made it into production.

  7. cron22 says:

    It seems like these days company trust is limited, if you ask me.  You never know what somebody will charge you.  Look at the stuff from the airports these days, albeit that those sort, (and that's only sort of), make a little sense.  

  8. Anonymous Coward says:

    You did report that "friend" of yours to the authorities, I hope?

    [My friend wasn't the one doing the double-billing. -Raymond]
  9. Chris B says:

    I have a friend that works as a system admin for a healthcare provider.  After installing some updates to one their systems, he wanted to double check that everything was working smoothly.  He executed a search against the system for the test account, and pulled up something like "Jim Testerson" or some such.  He scheduled some OB appointments, a mastectomy and some other stuff.  Shortly thereafter, a healthy, albeit confused, *Mr.* Tester shows up at the office to inquire about his bill.  This happened not once, but twice before any one really looked into it. After the second occurrence, the audit logs were checked and my friend was called into HR to discuss his "unauthorized" accesses to Mr. Testerson's account.  Fortunately, he was able to explain how the mix-up occurred, and is still working there.

  10. KatieL says:

    I used to know a guy who ran a porn company and he said easily 50% of his time was spent on the phone arguing with credit card companies about people who'd bought stuff and then (when the bill arrived) called up the credit card company to indignantly complain they hadn't — and definitely WOULDN'T — buy things from a company like that…

    The proportions of those men who either "didn't want the wife seeing the bill" or "were really just after free porn" wasn't clear.

  11. Mott555 says:

    I signed up for a domain name from a certain registrar. Every couple months they signed me up for a new service (such as some kind of mobile website optimization thinger) and began charging me, without even notifying me. Then they wait two or three more months before sending me a statement to let me know I've been charged. By that point they've charged me $10 a month for four or five months without me knowing about it, and I had to manually cancel the subscription. This has actually happened twice for me. Of course, the $50 isn't really worth going to court. If they do this to most of their customers then they're making way more money on these bad subscriptions than on actual domain names.

    I told them if it happens again I'm calling my credit card company to block all future charges from them. It hasn't happened since.

  12. @KatieL: your friend who ran the porn company should consider:

    a) using a nonoffensive merchant name when charging credit cards

    b) it's entirely possible that many of these transactions were actually fraudulent; not all fraud is on the merchant end.  Someone might have been using a card that wasn't theirs.  This is fraud, even if the person charging the card is (say) the cardholder's teenage son.

    @mott555: you shouldn't need to go to court to get your $50 back; it should suffice to call your credit card provider and say you did not authorize the transaction, and they should charge it back to the merchant.  If enough people do this for a given merchant, then the merchant has to pay a higher percentage to the credit card provider.

  13. My friend wasn't the one doing the double-billing

    I don't know, developing algorithms to determine who can be charged has "conspiracy" written all over it.

  14. Never mind, reread the post and saw "friend of mine /happened to meet somebody who/…"

  15. prunoki says:

    Maurits [MSFT]: that blind man story is from Roald Dahl. At least that is where I read it.

  16. Ah, that's the origin.  Here we go:

    "The Bookseller" http://www.roalddahlfans.com/…/book.php

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