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What do you do when customers' payment plans fail?

by DrBloggood
11 replies
I sell video courses; the customers gets full access to the products right away when they purchase. A small percentage of customers will pay with payment plans (by credit card) and just turn off their payments after e.g. two payments.

I first write them an email to make sure it isn't an accident. Most don't reply, one replied that he wasn't going to pay.

What now? This must be happening at least occasionally to everybody who is selling on the internet. I never knew it's so easy for customers to defraud companies on the internet by credit card.

I will now insert interest for any payment delays into my terms and conditions; that should generate a little bit more pressure. Other than that, I'm looking for debt collectors and debt collection lawyers. The sums are quite small and my customers are from several different countries, which makes this a bit more challenging.

I would love to hear how you guys are proceeding in cases like these.

Also, can you recommend any debt collectors or attorneys? Any general advice or resources?

Thanks!
#customers #fail #payment #plans
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  • Profile picture of the author DIABL0
    Break the course into sections / payments. They pay as they go.

    You could offer a discount if they pay for the full course with a single payment or tack on some additional amount per section. That way there is an incentive to make a single payment.

    If you actually finance it and they get the full course. Inevitable some are going to burn you.
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    • Profile picture of the author DrBloggood
      Originally Posted by DIABL0 View Post

      Break the course into sections / payments. They pay as they go.

      You could offer a discount if they pay for the full course with a single payment or tack on some additional amount per section. That way there is an incentive to make a single payment.

      If you actually finance it and they get the full course. Inevitable some are going to burn you.
      Something to consider. I'm assuming though that the ones who default are not interested in the course (anymore) anyways, and also this might be difficult to implement.

      The course is hosted on Teachable, and they have a Drip function. But not sure how to connect that with the payments.
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    • Profile picture of the author Steve L
      Originally Posted by DIABL0 View Post

      Break the course into sections / payments. They pay as they go.

      You could offer a discount if they pay for the full course with a single payment or tack on some additional amount per section. That way there is an incentive to make a single payment.

      If you actually finance it and they get the full course. Inevitable some are going to burn you.

      I agree with trying to just getting them to pay a single payment for the entire course instead of breaking into monthly payments. I've seen marketers charge up to a one-time $2k for an online video course and plenty of people pay it.
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  • Profile picture of the author Frank Donovan
    I doubt that getting debt collectors involved would be much use, especially if your customers are from other countries.

    How do your buyers access the videos? If a customer can download the whole course immediately, you don't have much leverage. But if the videos were streamed and password protected, you could simply deactivate the passwords until payment is received. They could still cram in all the course videos in the first month or two, but being unable to go back to them might at least be some kind of a deterrent.

    It might also help if you stated you'd be adding "important" updates or revisions at various points during the first year of the course.
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    • Profile picture of the author DrBloggood
      Originally Posted by Frank Donovan View Post

      I doubt that getting debt collectors involved would be much use, especially if your customers are from other countries.

      How do your buyers access the videos? If a customer can download the whole course immediately, you don't have much leverage. But if the videos were streamed and password protected, you could simply deactivate the passwords until payment is received. They could still cram in all the course videos in the first month or two, but being unable to go back to them might at least be some kind of a deterrent.

      It might also help if you stated you'd be adding "important" updates or revisions at various points during the first year of the course.
      I have a feeling that will not work too well, as the ones who default are either not interested anymore, or already consumed the entire course, or have just run into money problems.

      Buyers access the course over Teachable.

      Debt collectors have to sit in the country the customer is from, or be international debt collectors. Shouldn't be a problem. My main problem is that the amounts are so small.
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  • Profile picture of the author Odahh
    How many payments total are involved.
    And what. Is the added cost to the customer for going with payments over 1 payment
    What percent of those on payment plan default.

    If the amount of money involved is small it will probably cost you moreoney time and basic mental stability to recover than you will actually get .

    Add a premium to your payment plan and I am making up this part as I go so there is probably a real figure for this

    Let's say you have 6 payments and the normal default point is 2 payments. Each payment has a premium say the full price is 250 bucks instead of 6 payment of 41.69. the payment are 46 or.

    Blah blah blah . Just add an extra fee to each payment so so it you have 1 out of 5 payment default you make the same amount as if you sold 5 courses without payments.

    Processing and payment fees
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    • Profile picture of the author DrBloggood
      Originally Posted by Odahh View Post

      How many payments total are involved.
      And what. Is the added cost to the customer for going with payments over 1 payment
      What percent of those on payment plan default.

      If the amount of money involved is small it will probably cost you moreoney time and basic mental stability to recover than you will actually get .

      Add a premium to your payment plan and I am making up this part as I go so there is probably a real figure for this

      Let's say you have 6 payments and the normal default point is 2 payments. Each payment has a premium say the full price is 250 bucks instead of 6 payment of 41.69. the payment are 46 or.

      Blah blah blah . Just add an extra fee to each payment so so it you have 1 out of 5 payment default you make the same amount as if you sold 5 courses without payments.

      Processing and payment fees
      I did two payment plans, one for 4 months, one for 6 months. Half of the payment plans for 6 months defaulted (all before the third payment). 4 months plans are all good so far. I should add that it's not a big number of samples.

      The added cost for payment plans is +20%, which is standard across all industries.

      I get that this will always happen, but looking for a standard procedure now and also how to not let the fraudsters off the hook completely scot-free. See my comment above.
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  • Profile picture of the author DrBloggood
    Btw, one thing I will certainly do is add solid terms and conditions that also let them pay interest for payment delays. That might actually be an incentive to pay. I will also add my choice of jurisdiction and applicable law.

    Finally, a letter by an attorney makes most people panic and comply. This is a big part of the business model of insurance companies all over the world. You can also try making their credit score worse, but I have no idea if that is possible for me (also depends on country, etc.).

    Also, don't forget to block these people from ever purchasing from you again. Stripe has a function called "Radar," and most good shopping carts have a blocking function too.

    How come 4 honest people have to pay for one fraudster? I would already be content if I could give them a serious disadvantage, even without myself gaining an advantage (as long as it's effortless for me). But there has to be some repercussion by the merchant, or they will just go on to do this to the next guy (to you) as well.
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  • Profile picture of the author Kay King
    IMO, 6 months is too long to hold their interest and your results seem to prove that. Why not stick with 4 months - and learn how to set up the drip you say is available?

    I think you are on the wrong track. You are looking for ways to compel payment or add 'consequences'....when you should be looking for a way to have fewer payments or provide the course in sections that follow each payment.

    What is the cost of the product - what are the payments? You say 'small sample' - how small?

    These are not necessarily 'fraudsters' - they are buyers who lost interest. They've seen the entire 'product' and they're done. I don't think this would happen to many sellers here - most would not provide the whole enchilada and trust people to keep paying for 5 more months after that.

    Btw, one thing I will certainly do is add solid terms and conditions that also let them pay interest for payment delays. That might actually be an incentive to pay. I will also add my choice of jurisdiction and applicable law.
    You can do all that - but if I saw it on a sales page - I'd change my mind about buying. If you 'protest' too much, prospects will wonder what's wrong with the product. Something to think about.
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  • Profile picture of the author luciesmazanska
    Originally Posted by DrBloggood View Post

    I sell video courses; the customers gets full access to the products right away when they purchase. A small percentage of customers will pay with payment plans (by credit card) and just turn off their payments after e.g. two payments.

    I first write them an email to make sure it isn't an accident. Most don't reply, one replied that he wasn't going to pay.

    What now? This must be happening at least occasionally to everybody who is selling on the internet. I never knew it's so easy for customers to defraud companies on the internet by credit card.

    I will now insert interest for any payment delays into my terms and conditions; that should generate a little bit more pressure. Other than that, I'm looking for debt collectors and debt collection lawyers. The sums are quite small and my customers are from several different countries, which makes this a bit more challenging.

    I would love to hear how you guys are proceeding in cases like these.

    Also, can you recommend any debt collectors or attorneys? Any general advice or resources?

    Thanks!
    Preventive measure would be the most effective. Working on freelancing sites that offer seller security (like Fiverr or PeoplePerHour) would help reduce the probability of having payment issues. You can also choose to deliver in parts, as payment is made, or request full payment before completing the delivery.
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    • Profile picture of the author Jeffery
      Originally Posted by luciesmazanska View Post

      Preventive measure would be the most effective. Working on freelancing sites that offer seller security (like Fiverr or PeoplePerHour) would help reduce the probability of having payment issues. You can also choose to deliver in parts, as payment is made, or request full payment before completing the delivery.

      Seeing that the Original Poster created this thread 15th Nov 2019 and has not responded since 18th Nov 2019 I think you are a bit late. Unless you are trying to increase your post count.
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