Oops! Sanity's Buy-now, Pay-never Error
Sydney Morning Herald
Saturday November 27, 1999
Hoping for a free CD, Internet users swamped Sanity.com's Web site yesterday.
They may have been too late. On Thursday Sanity.com's general manager, Mr Tony Standley, told the Herald that a technical problem was allowing some customers to get free CDs by omitting their credit card details.
A day later his boss, Mr Brett Blundy, whose company Brazin controls the online music retailer, denied any technical glitch.
Mr Blundy was in damage control.
``We're close to having a meltdown," he said after the site experienced the highest amount of traffic in its short history.
``But there is no major issue here, and there are no free CDs being given away now," he said.
Mr Blundy blamed human error rather than computer failings for any free CDs that had been received.
``There have been invoice errors and people not paying attention to their job. But that is the kind of problem that every Internet e-commerce retailer has."
The problems with the Sanity.com site began with a design flaw which was originally contrived to make life easier for consumers.
Customers are given the option on the site to skip providing their credit card details if they feel uncomfortable about Internet security.
Mr Blundy said that these customers should, theoretically at least, be able to supply billing details in different ways.
``One of the options we have on our site is for consumers who are concerned about giving their card details on the Web, to fax, phone or email them to us."
However, the Sanity.com Web site does not tell consumers the phone numbers or e-mails they need to use to pass on credit card details.
This design flaw has existed since the site's launch on October 18. Invoices obtained by the Herald from customers who had left out credit card details and still received their CDs showed that the ``payment by" field was left blank.
On Thursday, Mr Standley said that no customer would be retrospectively billed for any free CDs.
Mr Blundy said that he had ``asked questions" of his staff yesterday about the absence of alternative methods of billing on the site.
``That is unclear, and I admit it is a problem that shouldn't be occurring. We will absolutely fix that as soon as possible," he said.
Sanity.com's shares are set to debut on the Australian Stock Exchange on Tuesday after an $8.4 million float of 14 per cent.
Sanity.com maintains that no substantial revenue has been lost from the free CDs, so it is under no obligation to file a prelisting disclosure to the Australian Stock Exchange.
The prospectus for the float had no revenue forecasts.
``The directors of the company do not expect the online music business to earn profits during the financial years ending 30 June 2000 to 30 June 2002," the prospectus states. ``As a result, the directors consider that they are unable to provide potential investors with reliable revenue or profit projection."
The US-based company which provides the technical, financial and ordering system for the site, Global Fulfilment, also denied any technical error but revealed that the Sanity.com Web site had not installed an automated credit card processing system in the first few weeks of operation.
``Sanity has told us that in early days before they had credit card processing in place, orders could have been shipped in good faith," said Global Fulfilment.com president, Mr Charlie Gilreath.
Sanity.com has cut its relationship with Global Fulfilment for the technical design of the site, and will do that in-house from December. Global Fulfilment will still provide co-ordination and fulfilment of CD orders.
© 1999 Sydney Morning Herald
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