$7.5 Million Billing Error at DreamHost

Los Angeles shared hosting specialist DreamHost accidentally overbilled customers by $7.5 million Monday. Yes, you read that correctly. DreamHost co-founder Josh Jones writes that while trying to identify unpaid customer bills from all of 2007, he accidentally ran the process using "2008" instead of "2007," and automatically billed the credit cards of nearly every Dreamhost customer for an additional 11 months of web hosting fees. Jones says the company is correcting the billing mistake and refunding accounts.

Customers are not happy. There are more than 1,000 comments on the DreamHost Status thread about the incident and another 200 comments on Jones' blog post. Some commenters report that their hosting accounts were shut off for non-payment, including some resellers who said their customers were knocked offline as well. DreamHost is acknowledging that the errant billing may have caused some customers using debit cards to be overdrawn and incur bank fees, and promises to address these issues after it corrects the billing error.

Jones is known for offbeat blog posts that use humor to defuse customer frustration over DreamHost's regular performance problems. He stuck to that format in today's post explaining the billing problems, illustrating the post with pictures of Homer Simpson and characters from the movie "Office Space." That's not playing well in the comment section, where customers apparently don't view erroneous auto-billing of their credit cards and bank accounts for hundreds of dollars as a laughing matter.

The incident is being discussed at Digg, Web Hosting Talk and the DreamHost forum.