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I don't know why so many people voted no but isn't the law requires hosts to reactivate the account?
To begin with, shutting down the server without client's consent is already criminal damage to property in Hong Kong. Not to mention the entire Trade Descriptions Ordinance. The client can simply go in a police station and report that you have accessed computer with dishonest intention, then bro, you are in a lot of trouble.
I don't think you understand there situation here buddy. We are not obligated to provide a service without payment and the moment the dispute in PayPal gets opened, the funds are no longer available to us. The 'client' had plenty of opportunity to retract but instead they dragged it out as long as they could, costing time (and money). We did not access any of their data nor do we hold any of their property. We have not done anything remotely illegal.
Though I can tell you a true story about a hosting company in HK who blackmails their customer and withholds property (equipment) and the HK police don't give a damn!
Noop, you misunderstand the law. First, "criminal damage to property" doesn't relate to money (see CO. s59(2)), and of course, you still win the dispute. Second,
You have caused "a computer to function other than as it has been established to function by or on behalf of its owner" (CO. s59(1A)(a)). This server should be running, but you caused it to stop running. And that, yes, constitutes a crime.
It's not about the efficiency of HK police, I mean, you should follow the law and regulation, as an educated HKese. Plus, the HK police is actually quite efficient. In your story, clearly the customer didn't provide enough evidence to the police, so they did nothing at all. Last time someone hacked my website, I gathered enough evidence to the police, snapshots etc., and the hacker now won't be able to arrive at HK anymore.
Sorry but you don't know the story enough to make any assertions what so ever. It's a long story and I have no intention to type it up again.
In any case, the client was in violation of our terms of service and we have no obligation to continue to provide a service or provide a refund in instances of violation. In fact, under HK law, we are even entitled to persue such 'clients' who violate our terms for damages. This is standard practice among big ISPs. Failure to pay a small bill (for example phone contract or broadband) can, and often does, result in the service provider pursuing the 'violator' not only for the original bill, but also any cost around collecting that money, legal fees, and the full value of the contract.
I'll give you an example. If you use your broadband service with an ISP to perform some illegal activities, if the ISP knows, they are duty bound to act and prevent you from using their services. This normally means termination of the contract. But if you have a 2 year contract, and you're only 2 months into that contract at the time they terminate, you are still liable for the remaining 22 months. The justification is of course that the customer violated to the terms of service, and given there is actual cost in delivering the product, the service provider is entitled to recoup those costs.
Welcome to Hong Kong!
You want to test it? I can give you a free trial if you like.
Except that you didn't mention the client violates your TOS ("client was unhappy with the performance of the server"), otherwise that would be a totally different scenario (or unless your TOS forbid launching a PayPal dispute). The client does nothing wrong, he opened a PayPal dispute (which is not wrong), and you spent your time dealing with the chargeback (which every business should expect some, and by theory, the cost of responding the chargeback is already included in the price of the product). You still have no legal ground to stop the VPS until you lost the payment (aka. PayPal decided against your favour). From an originalism prospective, that's how the law works.
It does! For the NAT VPS there is also an indemnification clause that there is 0 liability for any data held on the server and the client is responsible for his/her own backups.
But if your interpretation of the ordinance is correct, then no host would ever legally be allowed to delete client data. Ever!
Violation of TOS or refusal of payment be damned!
Again, I refer you to the standard practice of debt collection. The amount pursued by companies is typically the full amount of the contract + collect / legal costs. If the company is successful, the service is hardly ever provided as there is always some clause that they can show the client to have violated.
Worse still, in HK, contracts with ISPs are damned sneaky. The contract amount is normally something enormous, but with huge discounts. If you violate the contract, they come after you for the full value of the contract and the discount goes away.
So if you sign up for an HK$100 /month broadband service, they will normally show it as $2,000 /month discounted to $100 for 24 months. You stop paying 2 months in, and they come after you for $44,000 + legal, rather than the $2,200 it should be. This is just standard practice in HK.
Well, if the TOS did say specifically the client waived the right to file a chargeback, then that's it. Actually "0 liability for any data" only refers to cases like disk failure. If the host intentionally deletes the data before the end of the contract, it's still criminal damage to property.
Our position is that the contract was in breach at the time of the charge back.
From a legal perspective, the price of the product already includes the extra cost of support. In short, to the best of my knowledge and legal training, even if your price is $1, it still includes the cost for return, repair and chargeback administration fee (unless the TOS said these fees are excluded from the price, like these broadbands).
As long as it is specified in the TOS, it served as a reasonable defence. Anyway, my initial thought was, if it was in the TOS, why you posted this thread in the first place haha.
Just disable PayPal lol
You won the dispute and now you have the funds. They technically paid you. If they decide to sue, the cost they paid is compensatory damages. There is no limit to punitive damages the court can award for no re-activating the account. He could go through "Distress" by not getting it reactivated and need to pay a therapist for the rest of his life. Guess who the court would require to pay for those fees?
it depends what the reason they used was in the dispute.
if they lie in the dispute it is fraudulent...
Noop, lying in the dispute doesn't justify the misbehaviour of the host. Only the result of the dispute matters. In court, the judge will simply remove part of the claim that was based on the lie. E.g. when A sue B for copyright infringement of a software, but part of the software was not written by A (e.g. a third-party library), if B can prove that, the court will only remove these codes from the claim, and won't affect the final judgement. In this case, the host needs to prove that the client lied (and PayPal will likely rule in the host's favour).
Yes, that's the point. Haha, though we only have IIED in common law, we have a very buggy "access to a computer with dishonest intent", the police can literally arrest you for any reason with it.
Yes, that's the point. Haha, though we only have IIED in common law, we have a very buggy "access to a computer with dishonest intent", the police can literally arrest you for any reason with it.
Letss say, for arguments, that it was Paypal who sent the funds, not the client.
It does happen, example that happend to me not long ago: customer made an unauthorized withdrawel claim with their credit card company. Paypal lost the money and got it from me in return.
After I proved that the client actually used the product I won, got money from Paypal but they didn't get any money from the credit card company.
Who would you say is the owner of the account in that case? Paypal?
The customer tried to commit fraud when opening the dispute. Why should the customer walk away as the winner in such a case?
Your case is different than this case. In this case, the client didn't commit fraud, I bet he simply used reasons like "the speed is slow".
Plus, in your case, PayPal could still sue the client's bank, and if it wins, the bank gives the money back to PayPal, and then probably the bank will deduct money from the client's account. But lawsuits are expensive, so if the amount isn't a 5 digit they would probably just seal the case.
All in all, PayPal served as a similar function as a bank, you can file disputes to PayPal, and you can file chargebacks to the bank, so in short, it doesn't change the ownership.
@fkj "The speed is slow" isn't a valid dispute claim. The client obviously lied to Paypal for the dispute, thus commiting fraud.
No matter the reason why the client tried to chargeback, it is still against the terms at signup.
The client agreed that the product was non-refundable.
Opening a dispute is therefore a kind of fraud.
The client was not interested in paying for the service he used.
What proof is there that the reason was ”to slow”. What if the real reason was that the ip was already ”used”?
I had provided proof to both client and Paypal that speeds were more than reasonable. Multiple speed tests conducted to multiple locations with an average speed of around 30Mbit.
But the 'client' was upset about only being around 1-2Mbit/s (to his ISP in China). Speed tests to servers on speedtest.net ranged from 10 - 40 Mbit. When communicating with us, the 'client' stated that we must ensure high speed connectivity to ALL locations and that the speedtest.net and other servers tested were not fair because they used 'professional' lines. The 'client' also indicated that only download speeds were slow, with uploads still being fast. All this suggests the problem is not with the server but his own ISP (or configuration).
But even if it the speed issue was our problem, we do not guarantee performance, particularly to China! Anyone who knows anything about that market knows that CN2 bandwidth cost about US$150 /mbit per month. And this guy is on a US$6.50 /year NAT VPS. A fair amount to 'gaurantee' to China would be at most 3.7kbit/s (0.46KB/s) based on CN2 prices.
No matter how you look at it, the $6.50 /yr price tag represents extremely good value. And so for the NAT VPS we have much stricter TOS regarding refunds/charge-backs.
Since we did not provide any guarantees/SLA, there is no justification to dispute the transaction no matter how slow! Since when could you cancel your contract with your broadband or mobile phone provider because the speed did not meet your expectations?
Imagine that! You get a new phone contract, and the phone company advertises speeds of 150Mbit/s. When you use it, you're only getting 10Mbit/s averages, and those downloads from that warez site you love so much is only crawling at a few Kbit/s. Is that reason enough to contact the Credit Card company to chargeback the transaction? I don't think any rational person would think this to be reasonable.
Dealing with charge-backs / disputes is not without cost. And it is common practice in Hong Kong that companies who successfully win in contract disputes do not actually continue to provide the service that they were paid for.
My company had a contract with HKBN. Not only did they completely fail to deliver the service that they were contractually obliged (and paid) to provide, but they also managed to completely screw up the routing tables (BGP) that it affected our other routes, causing hours of disruption. Shortly after, it was determined that they were unable to provide the service in the first place, but did we get a refund or compensation? No. In fact, HKBN are in the process of suing our company for 'wrongful termination' of the contract! Never mind they cannot actually provide the service. Worse still, they used that typical HK practice of 'discounting' to inflate their claims. So our contract was something like $50,000 /month, discounted to $10,000, for 24 months, and they are basically trying to claim we owe them $1.2M! Crazy right?
@randvegeta
As a Lowendspirit provider, I'm with you on this. No SLA and no refund when signing up. If a client wants to test, I provide Looking glass on each location for him/her to test before buying.
Noop, you should know the basic legal principle that if you want to establish A committed fraud, you need to prove:
It the client launched a dispute on the ground that "the speed is slow" therefore "item significantly not as described", you cannot really prove the second condition, because, you need to prove that the client knows this is the normal speed, but he still launched the dispute.
All in all, the client wants his money back, not steal from the host. Therefore, in most cases, launching a dispute is not a fraud, because you cannot prove his intention.
If the problem lies with the provider, this is true but what if the real reason for the slow speed comes from the choice of ISP that the client has chosen?
As @randvegeta already shown, the speeds to other locations are good, only the client report " slow speeds".
Yes, we know about the bandwidth price, but you cannot really prove that the client knows <intention, see above post>. Aka. "the client didn't commit fraud". Plus, as far as I know, they really don't. Years ago, I did a few websites for mainland viewer, hosted at HK. They always complain about the connection speed. I told them 1M/s is really good, they were like WTF.
No, it's not common practice to stop service, it's actually a common practice to put this common practice in the contract. Haha. Of that, I did find strange.
Out of curiosity, did you counter sue them for material breach? If the court can summon some expert witnesses, I don't think you will lose.
@randvegata Why was the VPS offered as "non-refundable" in the first place? It seems silly not to offer a reasonably small no-questions-asked refund window and it makes your business look bad imho. You only lose the time it takes to hit "Cancel & Refund" in WHMCS.
Yes, and then, the client might still have defences, he can show a fast speed test between his local ISP to Alibaba HK, or PCCW likewise, he can even show a speed test with other local ISP.
And yes, if he can show he has a good connection between local and Alibaba HK, then he has a very strong claim that the problem is not with his local ISP, but the host, therefore launched a dispute.
This is really evidence against evidence. In most cases, defendant has the favour.
Fraud is simply the "wrongful deception intended to result in financial or personal gain". The dispute claims that the our services were not as described, which is patently untrue. Even if slow, it is not true that our services are not as described. First, we do not provide guarantees for performance. Second, we specifically put in our product description that there are no assurances with regards to network speeds, and if they need even a minimum level of performance, they should not buy it at all.
The very act of opening a 'not as described' dispute is fraudulent. If they ignored or did not understand our product description or TOS, this is hardly our fault or responsibility.
It really is!
Not yet. I have another case that's been going on for over 10 years now, and I have no intention to start up another case. The current play here is to de-escalate and find a mutually beneficial solution. But fighting it out in the courts is costly, both in legal fees and time. Experience has shown me it's not worth the effort. I'll fight this out only if we cannot come to an agreement outside of court.
Because of the type of service it is. It's costly to deal with the refunds in itself. Our other services are more flexible, but this is not. If you don't like it, then don't buy it! If you buy it, then accept it. It's pretty simple. If you order a meal at a restaurant, if you don't like it you still have to pay for it (unless of course you don't receive what you ordered).
There is no defense. Expectations should be aligned with the product description and price. We try and downplay expectations as much as possible. In fact the product description makes the service sound terrible! We even have a clause that says the buyer should be prepared to receive nothing at all, and if they cannot afford to lose that $6.50, they should simply not buy it.
Ignorance is never an excuse. Intent is not a necessary component of fraud.
Noop, fraud is a secondary offence, aka. you can report a fraud to the police. In a secondary offence, ignorance is defence, and you need to establish both actus reus and mens rea.