
Using Zipcar may damage your credit - kmfrk
http://fstutzman.com/2009/03/29/using-zipcar-may-damage-your-credit/
======
jfager
My ZipCar experience: I rented a car for a full weekend last October, and
returned it several hours before it was due back. I forgot to "tap out",
though, and ZipCar sent me a late return notification and charged my credit
card. No big deal, just a simple mix-up, so I called customer service.

Unbelievably, they couldn't do anything about it from the national help line,
and when I was redirected to the NY office, I got more runaround. It got to
the point where I called my credit card company to do a stop payment, as it
was clear that I wasn't going to get help from ZipCar.

Then I tweeted about it. Someone at ZipCar saw the tweet, and the whole
problem got fixed pretty much immediately - I got an email saying my case had
been reviewed, that the computer showed I did in fact return the car on time,
and that if I could cancel the stop-payment, I'd get my money back (which I
did).

It was awesome to get the problem fixed with just a simple tweet, but I wasted
hours on the phone and would have wasted hours more dealing with the stop-
payment fallout, when they already had the information that I hadn't actually
returned the car late. I'm still a member, but I think I've used them only
once or twice since. The whole experience left me pretty soured on them.

The takeaway is: if you're only giving good customer service to the people who
complain publicly, you're doing it wrong.

~~~
lsc
>The takeaway is: if you're only giving good customer service to the people
who complain publicly, you're doing it wrong.

Speaking as a provider who has been in that situation before (e.g. losing a
ticket, then responding to a public complaint) I agree _completely_. First
off, 98% of your customers are not going to complain publicly. They are simply
going to leave. And as I keep saying, the people who don't complain are the
cash cows... the silent majority, from whom you get most of your money.

Now, I'm not saying you should ignore public complaints... that would be bad
business. Respond publicly and solve the problem, or at least give a refund.
But you must treat the complainers like canaries. for every valid complaint
(and yeah, you will get invalid complaints... respond to those too, and offer
a refund, but it's okay to say "I'm sorry my service does not meet your
needs." - you can't be all things to all people.) you need to review your
processes, and figure out why the complaint wasn't resolved through normal
channels.

------
a4agarwal
This doesn't seem so terrible to me. You entered a contract with Zipcar where
you pay them an annual fee for their services. Failing to pay the fee doesn't
automatically break that contract.

Think of this way: what if you could simply stop paying rent when you want to
move out of an apartment? Or you just stopped paying your cell phone bill when
you want to cancel it? What if you forgot to pay your health care premium and
you lost your health insurance??

Clearly these aren't acceptable ways to break out of a contract.

The author's trick to "lose" your card to prevent auto billing is inviting
issues like this. It seems so much smarter to just check your credit card
statement each month. That would be much less work than having to update your
credit card number everywhere you _do_ want to renew a service.

Your credit card failed processing and Zipcar kept your service up and
prompted you to update the card. That seems like a great way to go. If they
had simply cancelled your account, I could imagine this blog post going the
other way. "I forgot to update my card and zipcar cancelled my account,
leaving me stranded when I really needed a car!!"

With critical accounts like your car, apartment, cell phone... it seems best
to be explicit when you want to cancel your account.

~~~
mrkurt
I'm a reasonably experienced consumer and until now I always would have
answered "yes" if someone asked "is cancelling your credit card an acceptable
way of terminating a monthly service?" I'm also a reasonably experienced
seller of recurring services... and my answer would have been the same.

If I'm pre-paying a service each month and I cancel my card, getting threats
about collections is the exact opposite of what I expect. What I usually
expect is for the service provider to either cancel my service or put it in
some kind of suspended mode and then follow up with me to see if I really
meant to cancel. Good billing providers would actually do this automatically:
<http://chargify.com/features/dunning-management/>

As an aside, half the purpose of Zipcar is that it _isn't_ a critical account.
It's an easy-to-use convenience that saves you from the complexities of owning
a car or making arrangements with a traditional rental service.

~~~
eli
It's a _possible_ way of terminating SOME services (I wouldn't try it on your
cable or cell phone bill). But I think it depends what you mean by
"acceptable." It's not very nice. If the best practice for a merchant is to
suspend an account when someone doesn't pay, then best practice for a consumer
is to cancel a service when you no longer intend to pay for it.

~~~
mrkurt
I dunno, it's not really "nice" or "mean". It's an amoral act. If a user
automatically prepays for services and isn't under a more formal contract (as
they would be with a cell phone provider, and possibly cable), opting not to
pay is their prerogative. Just as opting not to provide services is the
seller's prerogative.

Monthly services fees are a convenience for _both_ the buyer and the seller,
not just the seller.

~~~
blasdel
Nearly all cable services and most cell phone contracts are post-paid, not
pre-paid. How else would they tack on fees for elective usages without a debit
system?

It's effectively a credit system. You owe them money at the end of the month
for services rendered since the last bill.

~~~
irons
The existence of post-paid services seems to have no direct bearing on whether
pre-paid services, like Zipcar, should feel entitled to rapidly go ape on your
credit rating when the funding source disappears.

~~~
blasdel
It does absolutely have direct bearing on whether "opting not to provide
services is the seller's prerogative" as the parent stated, when the services
actually are under a formal contract and post-paid. The argument holds up for
Zipcar but not any of his examples.

~~~
mrkurt
I think you're making the same point I was...

~~~
blasdel
Sorry about that, you're right, I misread the negative leading into the
parenthetical

~~~
mrkurt
I'm exceptionally skilled at being unclear.

------
jrockway
I've read my credit card agreements. It says that if you authorized a
recurring charge before you cancel your account, and that charge shows up
again, you are responsible for it. (If it's erroneous, you can dispute it, of
course.)

The way to cancel services is to call up the provider and tell them you want
to cancel. If they charge you after that, dispute it. If they won't close your
account, sue them or write a letter to your state's attorneys general office.

Now ideally, there would be a way to cancel everything online... but that is
apparently not good for business, and it's something that the government is
going to have to mandate.

(Honestly, it surprises me how people manage their finances. Losing your
credit card to avoid paying for things that auto-renew!? This reminds me of
some hate mail I read that was directed at my employer; apparently this person
kept a $0 balance in her checking account, bought a $5 sandwich everyday with
her debit card, ate it, and then went to the bank and deposited exactly $5 in
cash. Since overdraft fees were calculated overnight instead of intraday, she
never paid overdraft fees. Then the algorithm changed, and she got charged the
overdraft fees. This apparently was because the bank was evil, and not because
it's stupid to go into debt to buy a sandwich when you are carrying the cash
with you anyway. But I digress...)

------
eli
I agree this is dumb of ZipCar from a PR standpoint, but that is a
ridiculously hyperbolic title.

Using ZipCar won't damage your credit. Canceling ZipCar won't damage your
credit. Failing to cancel ZipCar while also failing to pay for ZipCar _could_
indeed damage your credit.

------
yannk
There is good and ugly with zipcar. I have my share to say about the ugly.
They increased their fare when gas price went up, but didn't lower it when the
prices dropped significantly. [http://blog.cyberion.net/2008/12/zipcar-please-
lower-your-pr...](http://blog.cyberion.net/2008/12/zipcar-please-lower-your-
prices-gas-is-cheap.html)

Besides, a Marketing Executive noticed this post above and dropped me a line
saying he would get back to me the next day at the latest (I thought, yeah,
cool a 2.0 company or whatever. My expectations were lower, I just wanted to
vent out publicly about zipcar not listening). I never heard of him again.

In short? I'm not surprised one bit about their poor customer practice.

------
_delirium
This does seem somewhat unusual. Forcing auto-renewal upon customers (and
providing no way to turn it off short of actually cancelling the account) is,
alas, common, but most companies won't go so far as to turn the auto-renewal
over to collections. They'll send you an email or two complaining, then cancel
the account. I think all the times it's happened to me it's actually been
stated like that in the emails pretty explicitly; something like, your credit
card is no longer valid, please log in and provide new details within X days
or your account will be canceled.

Does this kind of thing meaningfully damage your credit, though? I wouldn't
think that someone sizing you up for something like a car loan would consider
a $50 dispute over an annual fee to be a very good predictor of your
creditworthiness.

~~~
mgkimsal
Problem is, it's usually not 'someone' sizing you up - it's an algorithm like
a FICO score that gets spit back to anyone looking you up for credit
considerations. When dealing face to face with someone reviewing a report for
a score, they might take that in to consideration, but it's not always (or
usually?) the case.

~~~
_delirium
Hmm, yeah, I can buy that. If I were designing an algorithm, I think I would
attempt to differentiate different types of disputes, so something like a
dispute with _Newsweek_ over a subscription renewal doesn't get much weight,
while skipping credit-card or mortgage payments does. But maybe they've run
the numbers and found that these small disputes actually _are_ predictive of
bigger defaults? Although, alternately, I could believe that the FICO folks
don't care that much about predictive accuracy, since they're basically a
monopoly with a good moat.

~~~
barrkel
I missed a credit card payment a few months back. The reason? I didn't have
direct debit set up on the bill, because I normally paid it in full manually
before the bill date. Why manually? Because I actually overpay in order to
increase the effective credit limit, since I'm new to the bank (moved to the
UK fairly recently) and hence have a low limit. So, for the sake of a 50 GBP
missed payment, I'll have that mark on my credit score for the next few years.

~~~
mgkimsal
If you do it fast enough, the bank _may_ remove the charge. They might not be
able to easily remove the mark on your credit report now - but you won't know
without asking. I've had my branch remove a couple of 'late payments' because
they were truly just 'late' by a day or two, and generally just a bit of
misplanning on my part. I can always move my money elsewhere, and they'll lose
a decent customer for the sake of a $30 fine - they've removed the charges in
both cases.

~~~
_delirium
I don't know if it's unusual, but none of the credit cards I've had have even
_reported_ late payments that were only a few days late. Discussion on places
like Fatwallet suggests that most companies report payments that are 30+ days
late, with additional badness tiers at 60+ and 120+ days late.

~~~
cperciva
_Discussion on places like Fatwallet suggests that most companies report
payments that are 30+ days late, with additional badness tiers at 60+ and 120+
days late._

Yes. Also, credit reports focus on _currently_ delinquent accounts -- a missed
credit card payment a few years ago almost certainly won't show up if the
account is currently not delinquent.

~~~
blahedo
> _Yes. Also, credit reports focus on currently delinquent accounts -- a
> missed credit card payment a few years ago almost certainly won't show up if
> the account is currently not delinquent._

This is absolutely untrue. Have you looked at a credit report before? There is
a table in it that includes information about each month for the last few
years (I believe seven); and each month is a whole column of information about
each of the various accounts you have been paying to. It indicates whether
there was no payment needed, payment on time, or, yes, a late payment. Even if
the account is currently paid up.

~~~
cperciva
Yes, I have looked at credit reports.

Don't assume that all credit reports are as detailed as the one that you saw.

~~~
mgkimsal
The major 3 in the US - experian, transunion and equifax - all have that level
of detail.

------
dotBen
A few thoughts _(I'm a ZipCar member btw)_ :

I don't pay an annual fee because I used a company code I found on a discount
site that gave me no annual fee (use Google to find one).

They wrote and said that he was several weeks overdue paying for his annual
subscription but I wonder if he'd tried to book a car whether they'd have let
him without a valid credit card on file? Point is, if they wouldn't have let
him rent a car then I think it's crap to say he was overdue because the
membership was still in effect. I think his MO on the "loosing his card" is
crappy, but this seems equally crappy.

Finally as an FYI, Felix Salmon wrote (admittedly a while back, but then this
OP link is old too) that ZipCar insurance is very weak in places, see
<http://www.felixsalmon.com/000855.html>. I'm not aware they've done much to
improve the situation

------
owyn
FWIW, I don't use zipcar, but this blog post is 18 months old... The plural of
anecdote is not research.

------
kungfu1
This is his own fault. Zipcar could have done a better job handling it, but
please note how he says letters _became_ increasingly more menacing. Why did
he not attempt to do anything about this until they were trying to send him to
collections?

Come on. you arent a victim. If i start to get calls about something, im going
to return them, and figure out what is going on here.

If he would have simply called them he could have avoided this. Zipcar saw
that he "owed" 50 bucks, they saw him not returning their calls, and finally
they sent his ass to collections. Pretty straight forward to me. Its his fault
for making sure that they wernt trying to bill him any longer, and to have
done something PRIOR to them sending him to collections. Sit back a moment and
ask yourself how Zipcar makes money.. hint: its not on the mileage

I use zipcar, and ive never had any issues.

~~~
barrkel
I don't know what it is about stories like this that make commenters here
start thinking in terms of fault.

It's not about fault. It's about the customer always being right, even when
they're wrong.

------
tokenadult
An epic fail that a company that is still so new in many markets (I was
considering Zipcar for having a second car for the winter in my town when the
biking weather becomes bad) would be so customer-unfriendly. I'll never be a
customer for the first time if this is how the company treats early adopters.

------
jarin
The grim reality thing about questionably ethical business practices like this
is the increased profits usually outweigh the drawbacks, as long as they can
keep the outrage down to background noise. Seems like nobody checks BBB
listings before buying anymore.

------
kscaldef
_I “lose” my credit cards yearly to avoid sneaky auto-renewals just like
this._

Doesn't this also damage your credit? Length that accounts are open factors
into your credit score, and people who cycle through cards typically see it go
down.

~~~
_delirium
If you just your card stolen, they send you a new card with a new number on
the same account, which I don't believe shows up on the credit report at all
(it still counts as the same account).

~~~
kscaldef
I don't believe that's how most banks handle lost cards, and I don't see how
that would avoid the auto-renewals as the original author was trying to do. I
assumed the the author was talking about closing the account and re-opening
with a new number.

EDIT: I'm sorry, I mis-read your comment originally and thought you said the
same number, not a new number. That said, I've been through this a couple
times, and each number shows up individually on my credit reports.

~~~
_delirium
That's how my banks have handled it, at least. When my Citibank card was
stolen, they sent me a card with a new number, but it was still the same
online login, same "years open" on my credit statement, etc. It stops auto-
renewals because merchants only have the old number, which they can no longer
charge. In my case that was mostly unwanted, because I had to go update the
auto-renewals I _did_ want with the new number (as well as updating it in
places like Amazon), but it'd stop auto-renewals that you didn't want as well.

------
mmt
I do something similar, but, arguably, lower-effort than outright cancelling
my cards yearly. I use disposable card numbers.

I only wish every single one of my cards offered this service, but, most
notably, Amex doesn't[1].

Currently, only Citi[2] and Bofa[3] (from their MBNA acquisition) offer it on
reward cards I'm willing to use[4]. If anyone knows of other issuers who offer
this on such a card or who offer it on an otherwise full-featured[5] business
card, with all cardholders having access to this feature, I'd be very
interested in knowing.

[1] They had it under the mark "Private Payments" but discontinued it. I don't
think they ever offered it on the Costco co-branded cards, so I never tried
it.

[2] "Virtual Account Numbers"

[3] "ShopSafe"

[4] At least 1% kickback payable as cash. Miles and "points" don't do it for
me.

[5] Employee cards with spending limits settable online is the critical one.

------
kscaldef
This is sort of off-topic, but does anyone know how Zipcar affect your
_insurance_ record, since you don't have an individual insurance policy? If
you use Zipcar exclusively for a couple years, then stop and go back to a
private vehicle and private insurance, do insurance companies consider you
"continuously insured" or are you going to get hit for having a break in your
insurance record?

(I've tried to ask this question of Zipcar representatives in the past, and no
one has been able to give me an answer. Their FAQ on insurance doesn't help
either: <http://www.zipcar.com/how/faqs/one-faq?faq_number=28>)

~~~
dotBen
I asked a similar question about building up a no-claims bonus for using
ZipCar.

The short answer is no, it's technically ZipCar that is insured and so from a
personal capacity you have no car insurance if you only use ZipCars and don't
run your own car (and personal insurance).

I'm not clear why that is a problem - you just loose your no claims bonus but
surely that's reasonable?

~~~
gamble
> you just loose your no claims bonus but surely that's reasonable?

Unfortunately not. In my experience, the slightest break in insurance coverage
is an excuse to push you into the highest-risk pool. It's completely
ridiculous. Perhaps the policy made sense before every piece of information
relevant to insurance was tracked by computers, but now it seems like
something that only exists to punish people who want to go car-free for
awhile.

~~~
cperciva
That policy probably exists to stop people from lying about their accident
history. It's really hard for an insurance company to distinguish between "I
didn't have car insurance in 2002" and "I had car insurance in 2002 and got
into a major accident I don't want you to know about".

~~~
gamble
I would be surprised if the insurance companies had to depend on the honesty
of their customers to know whether they'd be in collisions. Financial
companies don't depend on my honesty to know if I've taken out a loan. They
must share information about claims.

~~~
cperciva
If you tell them that you had insurance with company X, you can be sure that
they'll phone company X and ask for your claims history.

But there's far too many insurance companies around for them to phone
_everybody_.

------
PStamatiou
Heh, I've been a zipcar user since the flexcar days and this happened to me
but I just ignored it all. I ended up renewing some months later but Im hope
they didnt report me me. Though I did a credit check a while ago while apt
hunting and nothing odd showed up.

------
nickpinkston
I couldn't even get past the "you have too many speeding tickets phase" - nor
could my girlfriend...

------
itistoday
If you live in the Bay Area, a nonprofit alternative is City CarShare:

<http://www.citycarshare.org/>

~~~
dotBen
I'm _totally_ into non-profit schemes but from the math I did it seemed that
CityCarShare came out more expensive than ZipCar if you want to take the car
out of the city because they charge you $0.35c/mile in addition to the hourly
rental.

(ZipCar don't charge per mile just per hour).

I also have appreciated being able to use my ZipCar membership in other cities
in America and Europe, esp in emergences/unexpectedly.

~~~
gcheong
Their liability coverage is better - up to $1mil per incident vs. $300,000
with zipcar. I know at least one person who chose CityCarShare for this
reason.

