The Unethical Business Practices of Sirius XM Radio

xm-ethicsI finally pulled the plug on XM radio. It wasn’t easy because I had gotten used to the commercial free programming and access to unique programming. However, business ethics made me take the drastic step of shutting down a service I really wanted. Treating all customers equally and fairly should be the cornerstone of all business. Unfortunately, Sirius XM Radio falls very short of this ideal. Let me explain.

Back on August 7, 2012, I shared with you how I was beating the automatic renewal swindles that many businesses are using to generate revenue. In “Automatic Renewal Scams: How to beat them: XM, Radio, a case study” I wrote about how companies entice you with discounts only to lock you into automatic renewals automatically charging your credit card at the higher fees without them bothering to see if you are a happy customer. For them you are just another credit card they can auto draft at the higher rate come renewal time. They rely on how busy our lives are and how many of us don’t bother to deal with service renewals. By signing up you just become a cha-ching customer for the likes of AT&T, DirecTV and Sirius XM Radio, among others.

In my blog post, I showed you how I gamed the system in order to cut my cost of XM radio in half. Each year I played the game and each time I cut my rate in half, sometimes more. Had I allowed them access to my credit card or checking account I would have paid twice the amount the last two years. Instead, the last two years only cost me the fee for one year according to their published rates. As I prepared to replay the annual game, I realized the unethical business practice of some customers paying as much as twice as I have been because of their unethical practice of the “auto-renewal” swindle.

I was a party to their unethical behavior and decided that as much as I liked the commercial free service I was not going to contribute to their lack of business ethics. My problem with them is their bait-and-switch tactic of offering you a teaser rate and then automatically renewing you at their standard rate. It would be more palatable to me if their automatic renewal renewed at the lowest rate available to other customers. As a customer, I expect to get the best rate as everyone else does. However in the case of Sirius XM had I allowed the automatic renewals to go through, I would have been paying the highest rate possible.

This is how the scam works. Looking closely at the documentation you receive from them you will see “the plan you choose will automatically renew and bill at the then current rates until you call” followed by their toll free number. Under payment terms, you will also find this same doozy; “service will automatically renew and you will be billed for additional periods of the same length as the plan you choose”. In other words unless you proactively call them prior to your service renewal they will automatically charge you for renewing your account an additional term. I fully understand the business reason for captivating your client and making it easy to keep paying you for your service however, a customer should be afforded respect and treated equally as all other customers.

You will remember from my previous blog that rather than give them the opportunity to auto draft my checking or credit card account for renewals I was sending them money orders. When it came time to renew I conveniently received an invoice from Sirius XM asking me to renew my service with them.

The thing though, is that I soon realized that making the telephone call to renew always resulted in me paying half of what their published and automatically renewal rates were. In other words, all those who are stuck in automatic renewal purgatory are paying twice as much for the same service I was getting.

I am the type of customer that ends up costing companies more money because of the billing and customer support overhead I generate for them. Those loyal clients that just pay the renewal fees each new term are the types of customers that make a business profitable and yet they are the ones being taken advantage of by companies such as Sirius XM.

Although my meager little account may not have much effect on the bottom line for Sirius XM the principal of their lack of business ethics has made me decide I no longer want to do business with them. Therefore I am back to listening to five commercials per song but in the end it is worth it for the principal of the issue.

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