I bought a 1-year VPS. The charge showed up on my credit card account, which means it was a successful transaction. Two days later, after the payment, Racknerd sent me a KYC verification link through Stripe. The next day, Racknerd suspended my VPS.
Why take my money, charge for a year of service, and then send me a link to verify myself?
The biggest issue here is with Stripe asking me to verify my identity, even though I’m not using their service. Yes, they might be legal, but their intrusive behavior in collecting people’s information is unreasonable and should not be tolerated.
Racknerd is not innocent here. If you’re having trouble accepting my payment, then send it back and don’t provide me service. Why provide service for 2 days and then suspend my VPS? And then give me a cancellation button that only cancels the service but will not provide a refund?
This is what they said:
“We’ve received your cancellation request for this service, and it is in queue for the system to automatically process shortly. As a reminder, per our Terms of Service, refunds for any unused service time are not offered.”
In the future, I recommend avoiding services that require Stripe for payment verification. Though it seems impossible to distinguish between the transactions that requires it and those don’t.
Update: Racknerd have explained to me that cancellation of the VPS and a refund are separate processes, and a full refund will be issued.
The US government does not force us to use a KYC (ID verification / know your customer) provider, at least - not a basic web hosting provider. That could change whenever though, and I’m not sure if Racknerd has any special circumstances.
As for why would a company do this - to prevent fraud and abuse. If a customer signs up and uses a stolen credit card, who do you think is on the hook for that loss? Not the victim, not the bank - us.
Why would they use a stolen card if they’ll just end up getting their services cancelled one might ask - abuse. They’ll setup servers, create phishing pages, and immediately start sending out spam emails. Or distribute malware, or host illegal content, etc.
This creates more work for us and negatively impacts the reputation of our network, and harms our legitimate customers.
So yeah, if something so much as looks out of place on their order / information (such as using a VPN to place the order) we will usually start a ID verification. We’ll usually suspend them to lock them out while we wait on their response, or in extreme cases - immediately cancel and refund.