Since we have folks here who practice law, and/or are familiar with it, I thought I’d ask about this.
The company I work for (I will refrain from naming it here) offers a service which is renewable on an annual basis. The contract states that the initial service period is one year, but due to the nature of the service, results are often not forthcoming until after that initial twelve month period. Thus, it has become policy to require the second year’s annual renewal fee up front, amending the contract by hand to read “2 years.”
This is all up-front, so…so far, so good.
But I have learned from a client that a certificate is issued on which the expiration date is one year from the date of the contract signing. She inquired about the advanced renewal she’d paid and was told, “We’ll hold that and apply it when the deadline arrives.”
I don’t question that this will occur, but it is obvious to me that my company is banking the advance renewal sum (a matter of $250 - $300 per customer, which probably amounts to millions company-wide) and applying the interest to their own bottom line, thus appearing to be more profitable. And the customer has neither the use of that interest-making money, nor anything other than a hand-amended contract which states the amount paid covers two years. In fact, the customer has conflicting documents.
Legal?
Ethical?
Stupid and bone-headed?
What’s the deal?