HostGator committing a federal offense?
Apr 2, 2008 
Am I going to give you a law lesson. NO!, but I am going to share what I found through a client about HostGator. Well, I have a client who needs a website for their new business. They asked me which webhost should the get, so I said get HostGator because they are pretty big. After the fact, the client emailed me the chat conversation and the issue they had with hostgator. I said get the Baby Plan which is advertised on the homepage for $7.95 / month. It even says, No Hidden Fees and No Contracts. Apparently that is not true when you go and follow through with the plan.
At first, I thought they just put the best price on the homepage, and when you Read more, It will tell you, so I clicked More Info. Which still said $7.95/month. So I said well lets go and click order now just to confirm what my client was claiming. I proceeded to the cart, It said enter the domain. I entered one of the domains that I own. Next Page believe me or not said $9.95 monthly. Not even that, but they require you to sign up for 36 months for you to even get the price.
They not only put out all their terms up front, but HostGator false advertise their prices on the homepage by adding No Contracts / Hidden fees. When there is a 36 month contract needed to get that price. This is considered a federal offense in United States. I am wondering if there is a law suit awaits for this big hosting giant.
Even more funny was that their representative owned upto that they are false advertising and it was not an error.
Chat Transcript
info: Please wait for a HostGator operator to respond.
info: Welcome to HostGator Live Chat! You are now chatting with ‘Jeffrey S.’
Jeffrey S.: Welcome to HostGator, how may I assist you?
Client: My web designer just sent me this link to your site. He will be managing my site and told me to buy the 7.95 a month plna- the “baby” I filled out the form and clicked on baby. The total on the next page is 9,95 a month- why is it more than what you have on the selection page?
Client: Even the yearly rate is 120- no discount at all
Client: are you still there?
Jeffrey S.: I’m still here
Client: ok- thanks
Jeffrey S.: yearly is 83.40
Client: is that were the 7.95 comes from? I thought the web site said 7.95 a month, no contracts
Jeffrey S.: sorry , wrong page, baby doesn’t have a discount for 1 year, the 7.95 comes from the 3 year monthly average.
Client: ok- but when you select baby by clicking on :order now” it takes you to the place to pay and it says the cost is 9,95, not 7.95
Jeffrey S.: 286.2/36=7.95
Client: ok-but your math is still off- first- 83.40 times 3 years is NOT 286.20. it is 250.20. That is still. Also, the plan does not say anthing about the 7.95 being a 3 year plan. The web site says 7.95 a month- no contracts- that means, it is 7.95 a month. Otherwise, it should say 7.95 based on 3 years. You really can’t have it both ways. My web designer sends you a lot of business. I ca’t beleive that you are not posting your correct prices and trying to scam people with a a 3 year contract to get the rate you have on the website. I am already not impressed.
Jeffrey S.: when you pay for 3 years (36 months) you pay $286.20
Client: Do you rally have any idea what you are doing? Did you not type “yearly is 83.40″ in the second entry you sent? This is not fuzzy math- the numbers have to be the same.
info: Your chat transcript will be sent to xxx@gmail.com at the end of your chat.
Jeffrey S.: “sorry , wrong page, baby doesn’t have a discount for 1 year, the 7.95 comes from the 3 year monthly average.”
Client: ok- so we are back to square one- the “baby” is 9.95 a month- even though you advertise it on the website for 7.95- is that correct?
Jeffrey S.: 286.2/36=7.95 yes
Client: OK- I just want to be sure that you put it in writing that you prices are not correct. You fill out the form that says monthly at 7.95, and when I go to pay, the price jumps to 9.95. I do believe that is false advertising, or “bait ad switch” which is illegal. The feds require that you make it clear when a price is an average. Nowhere does it say that the price is an average.
Client: I will not waste anymore of my time or yours. Thank you for verifying this decepetive business practice in writing.
Jeffrey S.: You can email sale@hostgator.com and voice your concerns to them.
What do you guys think about this ?? I know I am not supporting HostGator any more.
Very interesting Syed. I have never supported HostGator nor referred people to them - because of the fact they oversell. They offer you loads of GB of bandwidth/diskspace and then force you to upgrade if you use too much resources.
They are gaining customers by offering so much for such a little price.
Would you buy a car for a dirt cheap price when others are selling for a much higher price? The cheaper car is likely to have more faults and is probably less reliable. I take the same approach when buying hosting. I go for value for money.
They do over sell. But does that harm you? It is only a show off that many others do. Shared hosting takers will not use even half of what they give. And this proved beneficial for me. I used to run at hostgator and use up almost 100 gb b/w even on shared hosting. It is then I decided to move to VPS because the load on their shared server was heavy. I realised this when I moved to VPS. My site was using 512 ram. No one in shared hosting will allow me to do that. They are good..apart from a few things. But that isnt relevant here.
Let me tell you, this isn’t the case only with Hostgator, there are numerous popular hosting companies offering the same kind of advertising, falsely implicating consumers.
Try out with any of the major companies, and you will have a different price when compared to their advertised price.
Yes, You are absolutely right. I checked bluehost, lunar pages and most of them have the same issue.
Thank you for the info I will defiantly make sure that I never use or recommend them. Did you ever contact the sales department?
That doesn’t matter, these are all marketing strategies.
I had a verbal fight with one of Anhosting Staff few months back when i was a nobb in the webmaster field.
I didn’t know about all these strategies and money making gimmicks, now that i am aware i do not refer them to anyone, myself being on Hostgator! Have no choice
Yeah, that was one of the reasons why I offered it to my client because I assumed they didn’t have paypal otherwise Uzzz Hosting is pretty stable itself.
Do u offer hosting for forum, an upcoming big forum ;-)?
I recently saw the hosting feature in ur site, but the packages were too small, at least for running a forum and few other sites.
Perhaps, let me know what specs are we looking at via email, and I will see if we can make the space.
False advertising - pure and simple
Hostgator was out of my mind a few months back but i still have to use them as i dont have knowledge and much time to shift my single web directory from them to my own hosting..
Yeah alot of people just end up going with them because they don’t have any other option.. many others just don’t bother going to new companies because they don’t want to be the risk takers.
I tend to think going with nearly any of these hosting companies is being a risk taker.
Man, that’s bad.I hope somebody files a lawsuit against them.
The thing is, they can only be knocked out by some real good lawyers because all these big companies have really good lawyers. One person just wouldn’t bother because who wants to pay crazy amount of law fees and waste their time with all the court trips ??
Hi Guys,
I’m actually the owner of hostgator.com and hope to shed some light on this. We were one of the last large hosting companies to advertise a lower monthly to only find you have to pay years in advance to get it.
We held out as long as we could but in the end we were losing to many sales from it and all of our affiliates were dropping us because they coudln’t advertise the low price on their site as they were for the other hosting companies. Some hosts go as high as 10 years now in advance to get a super cheap “monthly”.
We make it very clear on the signup form the prices so that nobody is tricked when signing up. I’m not hear to justify anything but at least I’ll be 100% honest and upfront about it all. If you think how all the large hosts are sneaky with their monthly price just check out their plans…..
Everyone is advertising 100’s if not thousands of gigs disk space and 10,000’s gigs bandwidth for a few bucks a month. All you have to do is see what dedicated servers are selling for now a days to realize something ain’t right there. All hosts have a “TOS” so it’s very very rare someone is able to use the disk space or bandwidth at any host before getting suspended for cpu / crashing the server. A good way to put it into perspective is the hostgator.com website only uses a few 100 gigs bandwidth a month however we require three very powerul servers to keep our site up and running. One for our ticket system, one for the site, and one for our billing system and our site is only using a few 100 gigs bandwidth! We have sites that sometimes use thousands of gigs bandwidth without causing any problems, but more often a site is using less then a 100 gigs bandwidth and crashes the server from a bad script, etc.
We have a TOS like the rest of them but basically it comes down to this…..
You have unlimited everything until you crash the server. If you crash the server or start causing high loads we have no choice but to require upgrade to dedicated or suspend you in order to keep the other 200 customers online.
Please email me at brent @hostgator.com if you have any questions. I’m personally here to help any of our customers or potential customers that may need a little extra TLC.
It is nice to see you here. If you notice this issue is not about people’s account getting suspended due to overuse of the package. This is the issue of hostgator being sneaky with prices. If you notice in my post, I took the screenshot and underlined it which shows
“No contracts or Hidden fees”
Which is obviously false advertising because when the person actually goes to sign up there is a contract that is needed to get that rate !!! ILLEGAL
Next thing, Bluehost - When I visit their homepage, they don’t claim No contracts or hidden fees … as a matter of fact, they don’t even mention their price.
My question to you is if others are doing things wrong, should you start doing the wrong also. If your competitors decides to ban affiliates and take their money and keep the client. Would you do that as well? Because from your policies described in the comment above that is what it seems. It seems like that you would do anything to make more money.
Perhaps a little more clarification.
It is not false. It is partly true. Marketing Technique!
Very good explanation there Brent. I have several sites hosted on hostgator since few months. I have had terrible experiences with other companies in the past like Anhosting but till now nothing bad had happened with hostgator. I have few things to let out in support of customers:
1: You guys should mention out the CPU usage limit to the customers on shared hosting.
2: Users should have an option of checking their CPU limit through control panel, as of now i see nothing.
It would be better for them to take control of the situation before the site crosses the CPU limits, and i personally been into this kind of situation.
3: When a customer wants to opt out of your hosting, You should provide him with cpanel and ftp access for a period of time in order to get his things settled. Unlike, my previous host they gave me backups which were corrupted.
I had gone nuts requesting them each time to get the backups from command line.
Furthermore, there are many issues apart from the above mentioned which should be transparent and easy to understand as majority of the customers who sign up with popular hosting companies are new to the online world and barely know the inside out details.
I appreciate your kindness in visiting this post and personally responding to it.
Regards
Brent, the point here is not to claim that you are on your point, but the thing here is that you are not upto your words, and saying no hidden prices, but actually are charging more than what is advertised there(indicating the presence of hidden price).
[...] Hostgator, being a reputable name among Hosting companies was spidered by Syed today for their TOS of their hosting plan prices. Its a regular phenomena we come across almost all [...]
It is a kind of true thing. Per month 7.95 if you buy for 36 months. Thats a way of attracting customers. A Marketing technique
I never said that $ 7.95/month was wrong. If you read the issue carefully then it will be obvious.
The first screenshot i posted said No Contracts, or hidden fees. But in reality there is a contract to get that price !!
It is a marketing technique which is called False Advertising … which is ILLEGAL!
I wont fight for something that doesnt concern me..haha. But I still say that it is not illegal. They are already giving it. $7.95 per month (IF you take for 36 months) Anyways….
IMO it is a completely false statement when they state no contract required. You need to agree to a 36 month term to get the price they are promoting.
Your right, iv;e seen couple of sites do that they think they’re slick,but don’t worry we know better.
I think this is not done by hostgator alone.
Browse almost all hosting sites and you will find the same situation.
yeah I saw lunarpages and bludhost have the same issue, but atleast they don’t claim No contracts or hidden fees like hostgator.
It reminds me of that old saying you tell kids - If your friend jumped off a bridge would you jump too? Just because others misrepresent offers to their clients does not make it right.
There we go someone understands the concept .. I guess you gotta have kids to understand Bruce :p
Ha ha nice saying Brent
I myself consider a hidden fee to be something you can’t find when you’re signing up for a service. It’s usually the fee you discover after you paid. Our signup form is very clear with what you are paying and what you get so nobody is tricked the time time the sale is closed. We also have the 45 day money back so even someone was some somehow tricked they could get a refund at any time.
Also where it says the pricing on http://www.hostgator.com/shared.shtml
It has the price underlined and when you hover over it you get the break down. We also have the question mark to the left of it and if you click it you will see the pricing structure.
I do not feel what we are doing is much different then our competitors. Does it make it right? Of course not….
Do we have to do it in order to compete better? Absolutely!
This practice may not be the best but at the end of the day I feel hostgator is a very honest company that does the best possible job to provide outstanding service. I believe so much in it on our website it says “Our owner Brent Oxley is at your disposal for any problems you may have.” This may not seem like much but when your hosting a million websites my email box can get quite busy.
Sorry I don’t agree Brent - when it says one price with no contract and later when you go to pay it says whoops to get that price you need to commit to three years that is deceptive.
you are flat out making an offer that you do not come through on - you are offering it at one price with no commitment them when someone wants to order it, you are making them commit to 3 years… That is the old bait and switch which IS actually illigal… At least in the US.
You are offering something that you don’t actually sell… That is hosting at 7.95/mo with no contract. You don’t actually sell that.
You bait visitors with it and switch them when ordering by either making them commit to three years or charging them 9.95….
Ethics in business does not get away with using the excuse of - well everyone else is doing it so we can be deceptive also.
If your competitors are doing it then call them out also - report them to the proper authorities. Get screen shots, save a online conversation with their sales staff to document it. Much like this post.
Brent you got caught. You got called out on it. Own up to it and do the right thing.
Syed, many of the web hosts do the same thing. You pay less when you buy for more time. I think it’s pretty fair to do it as a business strategy.
When i first dealt with hostgator, they had $9.95 written on order page.. This thing came in last two months or so. I think they adapted to the changing business environment.
They followed the very basic step of “Attract The Customer….Strike ‘em Hard”
Anyways…leave that apart. I do agree to you on this point that they should not write “No Hidden Charges and No Contract”. Because signing up for 36 months in advance definitely is a kinda contract. You’re then bound to use the service. On that part it’s wrong. Remove that sentence and i think they are being pretty fair in the prices.
I do not feel what we are doing is much different then our competitors. Does it make it right? Of course not….
Do we have to do it in order to compete better? Absolutely!
Dude. Are you kidding or what? I’m sure that is a shared belief of every business person, but come on kid! You don’t actually come out and publicly state that you know YOUR OWN company is doing something deceptive, but it’s o.k. because it keeps you competitive. I just can’t believe that as the founder of a successful company, you would make the above remark. That is what they call Machiavellian business practices, and it is what killed companies like Enron and Worldcom. I’m sure they started out with just a few little “white lies” to their customers as well. But look What they graduated up to.
DON’T EVER make a statement like that again, as I’m sure you have already scared a few people off with this one comment alone. I know I was seriously considering going with your service, but not now. YIKES! Talk about getting your information from the horse’s mouth. The company’s founder comes on and reveals that he runs a dishonest business.
I agree that competition among the hosting providers due to an over saturated market makes almost all hosting companies follow the same time of marketing scheme. I dont blame you Philco.
What’s the big deal? Can’t you just cancel your plans before you pay. You are not billed a greater amt after you have paid, right? We should learn a lesson from this. Companies will always try all sorts of marketing gimmicks. Be aware and keep your eyes open when making any transaction!
Your surely right syed they do give you alot of space, but if they make you upgrade everytime you use too many resources then they’re just ripping you off.But who am i to say something, just an sujjestion that they might not be all that.
Sadly a lot of hosting companies do this. Some of the companies that advertise 4.95 or 5.95 a month require a 2 year service agreement. The point is to lure you in and then make you realize what you did and at that point its too late. Its kind of sad actually.
[...] / Attacks - Controversial posts tend to grab alot of attention toward the site. I wrote once about HostGator committing a federal offense which grabbed alot of attention (Sadly they still haven’t fixed it). Also attacking companies [...]