Exactly. Recurring payments and the prepaid cards don't mix. Microsoft doesn't even have my credit information for XBOX Live purposes.

Dear XXXXX,

Your subscription to Xbox Live 3 mo. Gold Membership is scheduled to be automatically renewed to Xbox Live Monthly Gold Membership on Thursday, November 27, 2008. Here is a description of the service:

Welcome to the future of gaming and online entertainment. As a new Xbox Live® Gold member, you will enjoy access to demos, trailers, downloads, tournaments, friends, and your gamertag, your unique digital identity. For only $7.99 plus applicable taxes per month, your monthly Xbox Live Gold Membership gives you all the rewards, privileges, and possibilities that come with being a Gold member. Your membership will automatically renew to a monthly membership at the then current price, unless you change your renewal or cancel before your membership ends. Pricing details can be viewed in the Account Management area of your gamer profile. For information about changing or canceling your membership and your membership refund policy, go to www.xbox.com/live/accounts.

Please confirm that your account and payment information is up to date.

To update your credit card information:
1. Select your gamer card.
2. Select Account Management.
3. Select Memberships.
4. Select the membership you want to update.
For more info, go to www.xbox.com/support or call Xbox Customer Support at 1 (800) 4MY-XBOX.

Thank you for using Microsoft Online Services.

The Xbox Live team.

In any case, it's a good reminder for some and will be a good lesson for others, and I'd like to applaud Thomas for publicly taking responsibility for this miscalculation.

I didn't mean your post was stupid, sorry that it came across like that, I meant the story on Consumerist.

The person wanted to pay for individual months obviously. If they had wanted to pay for a year at a time, they can change to a 1-year plan for $50 at any time. They admitted it was their fault, but I just think it's the same as assuming AT&T will roll you up to the next plan when you go over your 500 minutes in order to save you from paying overages.

At least he got what he asked for.

The more expensive monthly rate is essentially a surcharge for your reduced risk. Alternatively, the increased security the company gets from your guaranteed year's payment is reason for them to offer a discount.

Also, you need to look at the present value of the money you give them. If you pay for the entire year upfront, MS can then invest your money into other project, or otherwise earn more money with it over the year. With monthly payments, they earn much less interest than with an upfront lump sum.

Either way you look at it, companies have no motivation to upgrade their monthly customers to a yearly plan once they have spent that much money. I'm glad the OP learned this lesson now, so he can avoid the mistake later on, when it might have been more costly.

Yeah I did it this way too. I just thought I'll pay this month to try it out, I don't want a full year if I'm not going to use it after this game, right? I'm almost 3 years in my 7.99 per month deal. Totally didn't think about it until I read this. Now I think I will change it.....but what if I don't play for a full year....idiot.

It's simple. The XBox offer was "pay $x per month, or get a get discount if you pay for a full year now". That's it - nothing underhand, no billing system issues. The OP made the mistake of assuming that the discount was going to apply anyway, even though Microsoft never stated anything of the sort. 18 months later, he checks his statements and realises that his false assumption was, indeed, false.

It's basic common sense, and thankfully the OP realises and accepts his own blame. That some people are apparently unable to accept this or try to spin this into something Microsoft did wrong is shameful. This isn't a sign to "avoid paying Microsoft" or "only pay with points cards" or anything else. It's "make sure you know the T&Cs of signing up before you do so, and never make any assumptions". Because your assumptions may be wrong, and it'll be your fault if you lose out.

@glennski: Well, I guess if not a full year once he hit the rate, the OP was at least expecting Microsoft to say "hey, Thomas, we noticed you've already spent over $50 paying for xbox live. Did you know that if you pay $50 we'll give you a whole year's worth of xbox live?" etc.

What's the use of all of these multimillion dollar CRM systems anyway? It's not like: a) companies know anything about their customers and b) companies actually care.

Can anyone name any business that would behave as described? Monthly plans exist for people who want to pay every month, not as monthly installments towards a better plan.

Maybe if at the time of registration, he wasn't given the option of annual payments, this would be valid - but that doesn't sound like what happened.

on the one hand, no, you shouldn't ever expect that the company will ever give you the better deal by default. you selected monthly, you got monthly.

on the other hand, the billing part of xbox is horrendously screwed up. they SHOULD have better options. for instance, they should have a "cancel my subscription" option. you know, so you can tell it to not automatically charge your credit card. oh, and a way to remove your credit card. if they have any brains, they'll revise the whole damned system once the new dashboard update hits.

Yet.. my story about being ripped off by XBL doesn't even get a response.

I bought a prepaid card and accidentally applied it to the wrong gamertag (I own both) but MS Customer service won't help me because they don't sell the cards a third party does.

All I wanted was for the 12 months to be transferred to the right gamertag and after 3 levels of support on 5 different phone calls.. turned away and told to basically eat my $50. Thats why when the time is up to renew, I don't plan to.

@strathmeyer:
Shaheena has it right. Why would anyone assume this. You are signed up for a plan, and you pay for that plan. You get a discount for giving the money up front. Many companies do this.

I for example have played MMO's and payed monthly. It was a discounted rate for 1 year, which was 30 dollars at least off the monthly charge total for a year. Yet they didn't switch me over when I hit the mark for that payment.

Its called business. They are in it to make money. No one told him to pay the $8 a month, they just offered him the service and said a price. They also gave a price for the whole year. It's not a payment plan. What you should do is save that $8 a month for 5 months and buy a year subscription card. You will be without xbl for 5 months but then you get it for 13 more after that.

@Guard: OK first off XBox Live is the only focus of this article. Look at any story about problems with XBox Live billing on this site or any other; EVERY SINGLE ONE DID THE ELECTRONIC AUTO BILLING.

Also if you buy the XBox Live 1 year card in-store, you get 13 months of Live (1 bonus month) instead of 12 for the same price you would pay electronically.

While your point is correct on many PC MMO's, please learn to research the difference between XBox and PC MMO subscriptions before you make statements saying the person experienced with XBox is stupid.

Imagine the Cist post that we would see instead, after an equally hapless consumer paid ahead once, was automatically shifted, then suddenly billed the larger lump sum next period.

Billing systems simply do not wave magic wands, despite what magic customer X might *think* makes perfect sense.

If you want a different subscription plan, you change your subscription plan, on purpose, without secret magic being done for you. (Frankly, MS has a long history of trying to do secret magic for you, and usually, as most experienced Windows users can attest, they fail badly. Let's not encourage them to do more of it.)

It's not Microsoft's fault, I'm taking their side on this one.

I've had XBL for 3 years now and only paid $60. Prepaid cards are the way to go.

yea, you're right, I wanted to be a bit more direct and just say it's dumb to expect Microsoft to be able to figure out who's been paying by the month for a long enough period of time to qualify for the yearly rate, but didn't want to get accused of hating on the op. If you want the yearly rate, you get the yearly rate, you can't have your red ring of death and eat it too.

Why would a company do this? Is losing people like Thomas as a customer, perhaps for life, worth squeezing an extra hundred dollars out of him over a year?

These kits were apparently clearance priced, so they usually cost $80. But you can normally get 1 Yr GOLD subscriptions for $50 from any store, which is about $4.17/month, so that's definitely the way to go.

Especially because you can snag 12+1 month cards for $40 pretty frequently. Much better to pay about $3 a month and not be on the hook.

CHECK YO STATEMENTS

@Kishi: Well you know what happens when people assume.

For your card idea, this is the equivalent of buying 12 1-month cards for $8 each, and then wondering why Microsoft didn't send you a check in the mail.

Monthly billing lets you back out of your subscription early if you need to, while paying for a year at a time doesn't. You're paying for that ability. Same thing with MMOs, you only pay for 6 months at a time if you think you'll play all 6 months. If you think it'll be less, you go with the more expensive, but shorter-term, plan.

This is just like the text message thing discussed the other day. Customers need to research their options and make their own decisions. A companies job is to make as much money as possible, not save the customer as much money as possible.

It's kind of like letting your insurance payment lapse for five months, then getting in an accident and expecting to pay five months worth of dues to get your car replaced. Likely the company has let your coverage lapse.

They only give you a lower rate because you're paying them up front.

If you aren't paying up front, then they charge you more for the privilege to back out of the service at any time.

Did he honestly expect that after 6 months of paying monthly that he would all of a sudden get the next 6 months free? Or perhaps at the end of 1 full year he would receive a reimbursement check for $50?

Especially considering the fact we are talking about Microsoft here, a company that revolves around profits.

At least he was smart enough to realize that his logic was fouled, unlike the old ladies of yesteryear who rented phones on a monthly charge from ma bell for 65 years.

Seems like we do have the technology to cancel on the Xbox "Browser" they just want to rob us if possible.

Solution - Buy prepaid cards.

The upside, you avoid the big hit. On the down side, you are locked into a new contract.

XBOX: Do not start automatically rolling people into plans you think they want. OP admits it was his mistake. That is all.

The OP does get points for sharing this, knowing he'd get ragged on.

Personally I pay the month-to-month because I have no clue where my life will take me within that time. If I find one of those yearly cards for like 40 or less I'll pounce it, but when I could be away from home for months to years at a time with a phone call, I'd rather play it this way.

Why on earth would Microsoft put you on the $50 a year subscription when you didn't request it. I'd be more worried about them nilly willy moving my subscriptions around.

@coan_net: Dear Playboy, I bought 4 of your literature publications at newstand prices and am henceforth requesting the remaining 8 issues to be delivered to my home address as the price of 4 issues at the newstand price is the same as a yearly subscription.

@Swizzler121: Bad Consumerists don't check their credit card statements.

Same thing at McDonalds - Go and buy a BIG MAC for $3. Later go in and buy a fry for $1.50. Later go in and buy a drink for $1.50 (total $6). If you just bought them all at once in a combo, it would only be $5.

[please note I just estimated the cost of items to make the point - the prices are not exact]

Point being - many places offer discounts if you buy in bulk or buy in advance

@Cyco: new to the internets?

It blows me away how many posters are still attacking the OP. He comes on, admits his mistake and the leason he learned and then almost every other post is either an insult or some holier-than-thou jerk trying to shove an "I told you so" down his throat. What a bunch savages, I tell ya.

Moving forward - you really can't ignore the savings going with the 12 month option if you plan to continue using the service for at least one year.

Tip: Newegg has 12-month XBox Live subscription cards for about $38 shipped, and they are typically 12 month + 1 bonus month cards. 13 months for 38.92 = ~2.99 / month.

@Bladefist: "The problem with this is, he wants xbox to make a decision to withdrawl 50 instead of 7.99....Which is not what their agreement was."

I don't even think it's that. He assumed the charged would stop at $50 for the year, because that's how much a year subscription up-front is. Instead, Xbox charged him $7.99 a month, or roughly $96 a year. Sounds like he just assumed he'd be charged $7.99 for like 6 months and then be good for the year. Nothing works like that.

That sucks though. Hope you at least used it on a regular basis to sort of justify it though.

It's pretty clear, you pay monthly at one price and annually at another. MS WANTS (needs?) a large subscriber base, so they throw a bone if you commit to a year...and "penalize" you for going month to month.

Just buy they pre-paid cards, don't use a card to auto-bill.

@Kishi: true, but it's not like this is an exception, most companies will not roll over a monthly subscription when the yearly total is met.

Sounds just like plain old no-negative-connotaion-meant ignorance. Most anything with options for monthly billing are going to be more expensive than yearly billing.

The problem with this is, he wants xbox to make a decision to withdrawl 50 instead of 7.99....Which is not what their agreement was.

I've actually signed up for the monthly when I've wanted to game with a buddy for a little while. The most annoying thing is that they make you call in to cancel it.

But seriously folks, do people really think this might happen? "I signed up monthly instead of the discounted pre-paid but they didn't give me the pre-paid discount!?"

I always just pay for it using prepaid cards so that they have no way of charging me once the service is up.

Whatever.

Also, this charge went unnoticed for 18 months? Might be time to brush up on some personal finance basics.

That said, nice job with the letter, OP. Everyone makes mistakes and it's nice to see someone looking out for others.

Also, I'm not trying to "blame the customer" but its sorta like lease versus finance, it's two different methods with different benifits and pricing structures. It's good he brought this to the attention of others though.

Well, you are on a month by month basis, and pay for the benifit of being able to cancel any time. Just because the total you shell out ends up costing more than just signing up for a month, doesn't mean a company is going to go back and bascially change what you paid for. Like pay as you go cell phones, you don't go "well, I ended up spending on minutes what would have cost me to have had a contract all this time, so I should have had this just changed into a contract retroactively to save me money."

It's refreshing that the OP isn't all indignant about it or claiming some kind of entitlement. "I messed up--learn from my mistake," flies a lot farther with me than "Micro$oft should've been able to read my mind!"

Good stuff.

I don't see how this is the lesson at all. I think the lesson is, if I'm on a monthly billing plan, I'm going to get billed monthly.

Why would they.

What you are looking for is a payment plan for the $50 they normally charge for a year, not a $7 a month plan.

Lesson is that modern billing methods really aren't sophisticated enough to think logically like that.