Column: Risk Management

Captive Credit Cards

By: | November 2, 2016

Joanna Makomaski is a specialist in innovative enterprise risk management methods and implementation techniques. She can be reached at [email protected]

I subscribed to Netflix a few months ago. I entered my credit card information, enjoyed my first month of membership free and thereafter I duly started to pay my monthly fee. I watched on my laptop and got hooked on a new TV series.

With my blistering travel schedule I was delighted to now have the ability to watch this series while on the road from anywhere.

On my first trip abroad, I turned to Netflix one evening. An on-screen message popped up telling me that Netflix was only available to me while in Canada.

Netflix offers streaming service to roughly 190 markets, different volumes and types of programming based on region-exclusive content licensing agreements.

Simply put, Canadian Netflix customers get Canadian-specific content dictated by their licensing agreement, while American Netflix customers get their own version. I get that.

But I remained confused. I called Netflix.

I went from feeling confused to feeling flabbergasted. I canceled my membership. All of this took place in under five minutes, all while holding my credit card in my hand ready to purchase something … anything.

The exchange with customer service sounded something like this: “I would like to watch my Canadian version of Netflix that I paid for, please?”

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“No. You can’t, ma’am.”

“Why?” “Because you can’t.”

“Why?”

“You’re not in Canada.”

“But all I want to see is my Canadian content version that I paid for.”

“You can’t. It is for security reasons, ma’am.”

“What security threat do I pose?”

“You may give your password to someone while in the U.S. and they can watch it.”

“But I am not planning to give away my password.”

“I’m sorry, ma’am, you just can’t watch.”

“Can I buy an American version of Netflix to watch while in the U.S. then?”

“No ma’am. You live in Canada.”

I went from feeling confused to feeling flabbergasted. I canceled my membership. All of this took place in under five minutes, all while holding my credit card in my hand ready to purchase something … anything.

It is possible I do not understand this technology. Maybe I am under the false impression that this internet streaming service should work anywhere internet exists, just like my banking app.

But regardless the whole experience left me thinking about the inherently deadly flaw of this business model and how it is riddled with killer risks.

I looked into it. Netflix risks losing hundreds of thousands of customers in 2016. It claims that a rate increase is the culprit. The company tells its investors that an additional $520 million in annual revenue offsets the loss of thousands of customers. This pains me to read.

Who is doing their risk assessments? A mass exodus of users from around the world is inevitable if Netflix keeps this up. Business rule No. 1 – a customer, whose loyalty you have already won, is your most precious asset.

Netflix, are you listening? Free risk management advice: Let me get hooked on your products and services. Hold my credit card captive. Let me spend my money with you. Repeat with everyone else. &

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The R&I Editorial Team can be reached at [email protected]