13

Say someone advertises for their website and says "Its 100% free to sign up" then have them check a checkbox acknowledging that the owner of the site can cancel the service for any reason when they are signing up.

Now 5 months later the owner of the site sends the user an email saying "If you don't start paying us $20 a month we will shut down your service". Is that extortion? false advertising? or in any way illegal?

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    "false advertising?" I don't see how it would be. It says free to sign up and you didn't pay anything to sign up - exactly as advertised. If it said "100% free to use forever" and at no point does the contract change other than being asked to pay, then you might have more of a case for false advertising. – VLAZ Nov 20 at 8:24
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    I would be more concerned about their poor grammar. – Strawberry Nov 20 at 10:30
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    IMHO the owner should word it so aggressively. It should simply say "Starting on x/y your service will cost you 20$ a month. to cancel your subscription click here". This happens with many services all the time. Note that in most jurisdictions changes in costs/contracts done unilaterally allow the client to terminate the contract early and without penalties, so the owner probably cannot say "to cancel your subscription pay 1k$ now". – Giacomo Alzetta Nov 20 at 12:54
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    If you're unhappy with the free service, you can always demand a refund. – IMil Nov 20 at 23:16
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    To be clear, is the actual policy of the site to advertise free use, and hide the fact that you are going to need to pay after 6 months, or did they switch buisness model and now advertise the subscription for everyone on their website ? – Antzi Nov 21 at 3:02
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Is that extortion? false advertising? or in any way illegal?

Not at all. The owner of the site is simply exercising his right as outlined in the terms and conditions from when the user signed up. And giving users an option for continued use of the site (that is, for him not to exercise a right of which they were always aware) does not constitute extortion.

  • Say what you want - but morally this is still not right. The service owner appeals to offer a free service by hiding the liability to pay after x months - then threatens to close the service - this is "surprising" - and violates the obligation to provide ALL necessary information (that the service is not free at all ... ) .. So I will still call it at least false advertizing - which would HERE call for a costly Attorney's warning. – eagle275 Nov 21 at 8:53
  • @eagle275 Which part do you disagree with? Discontinuing the service (which the provider should always be free to do) or asking for money? (for the service, not the sign up which was the only thing advertised as free) – Lio Elbammalf Nov 21 at 9:08
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    don't split hairs - to me the whole deal stinks - they advertise free signup - and don't inform that the service itself costs after time X - which is a missed obligation. And discontinuing service is something else than extorting money to continue - However you call it - I find it wrong... And here in my country some lawyer will react - by sending a costly warning – eagle275 Nov 21 at 9:20
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    @eagle275 sending a warning to someone who acts well within the legal boundaries will be costly only for the lawyer who does it! – Josef Nov 21 at 9:56
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    @eagle275 Language such as "the owner of the site can cancel the service for any reason" clearly tells the user not to expect continued service. The expression "any reason" includes the possible one that at some point --doesn't matter when-- the owner of the site no longer wants to provide the service for free. That being said, the user is not being billed for service provided in the past. Thus, there is no such thing as liability, there is no deception, and nothing immoral about enforcing a straight-forward clause the user accepted when he signed up. – Iñaki Viggers Nov 21 at 11:37
18

This is perfectly fine, unless you have a contract which states that they must continue to provide free service until a certain date.

If anything, they're doing the right thing by notifying you that things will change so that you can make other arrangements if needed. If they started charging you $20/mo. without your agreement, that would be illegal.

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    Even if the contract states they must continue to provide free service, a contract with no consideration is no contract at all. You could argue that the website might get some user data or advertising hits which could be viewed as consideration, but in general, a contract that says one party will do something for nothing in return isn't enforceable anyway. – Nuclear Wang Nov 20 at 16:27
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Extortion is a threat to do something unlawful

While threats to do something that's harmful for you are a key component of extortion, those threats generally (there are additional, separate provisions for threatening to exposing secrets etc) need to be unlawful .

For example, if I haven't paid the bills for some service and they send a letter "pay up or we'll disconnect you, bill you a penalty, and sue you" that's not extortion because they're allowed to disconnect me, assess contractual penalties, and sue me in court. However, if they send a letter saying "pay up or we'll disconnect you, and kick your dog while we do so" then that might be treated as extortion because it includes a threat of unlawful violence.

For a random jurisdiction example, let's take a look at the California Penal code (emphasis mine):

  1. (a) Extortion is the obtaining of property or other consideration from another, with his or her consent, or the obtaining of an official act of a public officer, induced by a wrongful use of force or fear, or under color of official right.

Take note that rightful use of force or fear is not covered.

  1. Fear, such as will constitute extortion, may be induced by a threat of any of the following: 1. To do an unlawful injury to the person or property of the individual threatened or of a third person.

Threats to do lawful injury - i.e. taking lawful acts that will harm the other person (or, more likely, their property) in some way - are not covered by this section, and are not extortion if they don't fall under one of the other prohibited actions:

  1. To accuse the individual threatened, or a relative of his or her, or a member of his or her family, of a crime.
  2. To expose, or to impute to him, her, or them a deformity, disgrace, or crime.
  3. To expose a secret affecting him, her, or them.
  4. To report his, her, or their immigration status or suspected immigration status.

The other parts that can define extortion clearly don't apply here, only the first (threat of unlawful injury to person or property) is under discussion.

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    I don't understand your bold statement, as you list several otherwise lawful actions that would constitute extortion if done with the intent to induce a threat. I can legally report someone to immigration services, but I can't legally tell them I'll report them unless they give me $1000. Extortion does not require that what you're threatening to do is illegal. It's right there in the code you cite, "Fear, such as will constitute extortion, may be induced by a threat of any of the following", which is followed by a list of things which are otherwise legal. – Nuclear Wang Nov 20 at 16:35
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    @NuclearWang that list is exhaustive, not a listing of examples. If it's not a threat to do any of the very specific things listed in 519.2 - 519.5, and if it's not a threat to do unlawful things (the default/general provision in 519.1), then it's not extortion under that code. And the OP situation is clearly not one of these other things, the (misundertood) implication in OP is that extortion might cover the general "threat to harm" scenario, which it does not. – Peteris Nov 20 at 16:48
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    Agree that this case is definitely not extortion, I just disagree with the headline and focus on the lawfulness of the action. This answer implies that as long as what you're threatening to do is legal, it's not extortion, which is false. You present the penal code quote as a list of things that "are not covered", but those are exactly the lawful act that are considered extortion. They certainly don't apply here, but I don't know why you state that lawfully injurious acts are not covered under extortion law. It seems you mean "do not apply here" when you say "are not covered". – Nuclear Wang Nov 20 at 17:31
  • @NuclearWang true, that was an unclear implication, I attempted to clarify that paragraph now. – Peteris Nov 20 at 17:34
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This actually happens all the time and isn't considered extortion.

Essentially, this is nothing more or less than a free service getting monetized after a while. This happens many times per year. For example, earlier this year the Have I been Pwned API has switched from free to paid because of the large amount of abuse: https://www.troyhunt.com/authentication-and-the-have-i-been-pwned-api/. Another example is Jessa Jones, a New York mother who started fixing broken iPhones for free so she could learn how to fix her own broken iPhone and ended up starting a business to repair iOS devices other shops wrote off as lost causes: https://www.vice.com/en_us/article/pa79bz/he-was-murdered-in-a-hate-crime-she-brought-his-blood-soaked-phone-back-to-life-v26n4

Such a transition is completely legal, simply because this is how a lot of companies start: someone with a particular skill or idea makes this skill or a service based on this idea available for free, notices that it very popular and takes a lot of his free time, and decides to start charging a fee to discourage frivolous use and to monetize his skills. This is not meaningfully different from a company that already charges a subscription fee raising their prices.

If a user decides they do not want to pay the new price for the service, they're allowed to stop using the service and/or switch to a different service. This is the market of basic capitalism at work and a law that would curtail this would instead lead to many people who start doing something for free eventually just stopping to do so when it becomes overwhelming, instead of monetizing their activity.

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    I'm not sure Jessa Jones is a useful analogy, unless she was providing long-term service contracts that changed from free to paid. The question is about a change that affects existing customers, not future customers. – Barmar Nov 20 at 17:27

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