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I tried to do some honest research for this article, but nearly every person I surveyed was hesitant to admit whether they’d stayed at a motel. The motel has a bad reputation because the lodges are commonly located in seedy, desolate areas frequented by those who abuse drugs, those who pay for sex, and groups of high schoolers who may do both. The name is innocuous in and of itself, simply being a portmanteau of “motor” and “hotel.” Outside of movies and Live PD videos on Youtube, motels are just meant to be intermediate places to stay for those who need a break during a longer trip.

You’re on the road in rural Illinois. You’ve been driving for 8 hours, it’s past midnight, and you don’t want to sleep in your car. You come upon a dainty but sufficient motel on the side of the road (I’d imagine this is the plot to several horror movies). You pull in, an overweight male wakes up in the room adjacent to the front desk and receives you. The motel has a place just for you. You sign a contract that you don’t read and hand over $50. You carry your belongings to the budget bungalow and get ready for bed. Just before you shut your eyes, a cockroach crawls across your stomach.

There are many possible responses here:

  1. Survey the space and form an estimate regarding the number of cockroaches that will bother you while you sleep. Then proceed with one or more of options 2-7.
  2. Go back to bed.
  3. Call the front desk and request a new room.
  4. Walk to the front desk and request a new room or your money back.
  5. Sleep in your car.
  6. Kill all cockroaches in the room.
  7. Cut your losses and, fueled by adrenaline, drive on.

Of course, each response draws a web of possible outcomes. I don’t care about the hypothetical eventuality in this case. What’s important is that you’ve lost a small sum of money and it’s not worth the effort to get it back. In most cases, you’ll lose sleep and find that your payment is nonrefundable. If you aren’t met with outright refusal, you’ll have to embark on an odyssey to recoup the money spent. Just like finding yourself exhausted and stuck in a rundown motel somewhere in rural Illinois, a slew of other businesses can employ a similar tactic to separate you from your money.

The roach-motel business model is commonly employed by shady subscription services. Where a motel may make it hard to get your money back for a single miserable night, a dishonest business can design a cancellation plan that makes stopping your recurring subscription very difficult. Simply: it’s easy to get in, but getting out feeling whole is a pain in the ass.

You rarely hear about one of the main types of business employing this practice–adult websites–simply because most victims are from more vulnerable demographics (old men) and, due to the nature of what they purchased, tend to have glib tongues. If you dig deep enough, though, you’ll be able to find mountains of complaints about companies that have built small fortunes by being profit-driven without any sense of ethics. This complaint about a cable company written by a Harvard Economist communicates just how sleazy the business model is. A commonality in most related articles is that cryptic cancellation policies continually escape regulation.

It’s important to note that this model is not outright fraud, which is what makes it so pesky to squash. There are a few factors that contribute to roach motels being so successful:

  1. Charging small amounts of money
  2. Relatively dilated recurrence (how long will it take you to catch on to a charge occurring once per quarter?)
  3. Pitched to demographics who do not regularly check credit cards
  4. Elaborate, elongated cancellation procedures
  5. No clear way to submit complaints, not regulated by consumer-protection agencies, but not nearly enough money lost to justify legal action

Just like that motel in rural Illinois, any business that tries to trap you is going to be dealing with a mass of irate customers. How can they stay in business for prolonged periods of time? Well, oftentimes the customers just give up. Sometimes the business is offering a totally legitimate product–no cockroaches included–but just has an annoying cancellation process. I’ve spoken to people who run roach-motel-like online services (though they would never use that word), and they were all quick to insist that the product they offer is actually quite good. Of course, this is highly subjective, but it seemed to be like the difficulty of cancellation processes was seen as a business decision that had to be made. One friend, living in New York, had a justification that inspired this article (some editing by me):

“[My business] has a high churn rate. We offer a great service, but people are flaky. The customers we’re dealing with are [dumb] and waste time and money with inane support requests. We noticed that a lot of people were canceling for reasons that were totally solvable, so we built our cancellation process like an interactive frequently asked questions page. Anyone who wants to cancel has to pause and answer a bevy of questions. Most end up canceling anyway, but we’ve lowered our churn rate since implementing this. The percentage of unclassified support requests has gone down even as traffic has shot up. Some customers get discouraged and remain signed up for another month, some get frustrated and forget they’re signed up at all. Others file payment disputes with their banks. Every decision has consequences, but we truly believe that we are doing our customers a favor.”

What a nut! The case is special because I’ve simply never considered this to be a possibility. Are slimy businessmen just getting better at polishing their dishonesty, or may there be a rogue team of consultants out there sneakily pushing this strategy? Regardless, I’ve come up with a list of things you can do to avoid falling victim to such schemes.

  1. Never submit card details on a website that is not using a legitimate payment processor. Most “high risk” businesses that employ questionable tactics are screened out by payment processors.
  2. If you must, use a prepaid card. If you use a card with a fixed amount of money on it, you can safely toss it if you end up falling victim to a difficult cancellation process.
  3. Don’t be afraid to cancel your credit card. If the charges don’t stop or you can’t cancel, be prepared to cancel your card. However, this should be a last resort.
  4. Seek out legitimate online reviews and reviews of the company with “scam” in the title (even though this is a “scam” grey area). When it comes to businesses on the internet, you’re never going to be victim #1. See if anyone has recounted their experience.
  5. Always read the fine print. Legally, this is what separates a roach motel from outright fraud. If there is nothing in the terms regarding stopping your service, it’s dangerous. On the other hand, if you have to spend more then 5 minutes deciphering the cancellation policy, the business has spent a suspicious amount of time thinking about it.
  6. See if the website has cancellation and payment-changing links anywhere on the website. If not, run away!
  7. Will you be less apt to complain about the service because it is NSFW? Take this into account before doing business.
  8. Does the business have an established online footprint with identifiable owners? Is there a clear way to speak to the manager? What about the manager’s manager…?

 

I used to think that roach motels made no sense. I still think that they’re a net negative and a greedy business model to implement, but the internet is a vast place! If you search hard enough, you’ll be able to find business owners who embrace the model and still manage to justify it. Though I truly doubt that any customers end up being anything resembling delighted. I’d be interested to hear about your experiences–I’m off to take a road trip.

The Roach Motel Business Model