Cost of 'free' service

IF INTUIT STARTED making television sets, how long do you suppose it would be before the remote control became a service you had to pay for by the month?

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Those who have followed our chronicles of how the QuickBooks payroll tax calculation became a subscription service may find the story of a reader we'll call Ms. Billings rather familiar. A QuickBooks 2001 user, Ms. Billings recently downloaded a free update to the program when a pop-up window informed her it was available. She quickly regretted it.

"One of the features prominently advertised by Intuit for QuickBooks 2001 was the ability to send invoices via e-mail," says Ms. Billings. "With this latest update, I had to accept a new TOS [Terms of Service] agreement in order to keep using this feature. One of the terms -- even though they assure us in one of the post log-in screens that it will never happen -- says that we agree to pay fees as specified by Intuit for this service and that Intuit reserves the right to change their fees at any time. I tried to not agree to the TOS, and it wouldn't let me use the e-mail invoicing feature. I feel like this is bait and switch."

It was easy to see why Ms. Billings felt that way. When Intuit introduced QuickBooks 2001 in December 2000, the ability to e-mail invoices from within the program was at the top of the list of new features. "With QuickBooks 2001, small businesses can fax or e-mail electronic invoices and estimates directly to customers from within the program, saving valuable time," Intuit's press release said. At the same time, the company also introduced a free online billing service that would allow users to have their e-mail invoices paid by their customers online. As Ms. Billings had never been interested in payment-enabling her invoices, she had not signed up for that service.

Now in order to continue sending invoices, Ms. Billing had been forced to sign up for what Intuit had renamed the Basic Online Billing service. Rather than being able to send the messages with one click from within the program, she was required each time to log on to the service with a user name and password. So much for saving valuable time.

Adding to her suspicion that this service wouldn't be free for long was the fact that Intuit was also prompting her to try a "free trial" of the Deluxe Online Billing service, which on closer inspection turned out to cost $14.95 a month.

"What they appear to be doing is converting those people who want to send invoices and estimates via e-mail into Deluxe Online Billing prospects and customers by making them agree to the TOS," says Ms. Billings. Explanations on Intuit's site that having the Online Billing account "allows our servicers to identify you and your company" also raised privacy concerns for her. "To my eye, this seems like it's telling the user 'We're keeping an eye on your invoices and it's for your own good.' Scary."

It got scarier. After she first wrote me, I noticed some additional disturbing aspects of the TOS document and its associated privacy policy she'd been sent. In the TOS, Intuit reserves the right to "promote and/or advertise other products and services through the Services ... within Service forms, invoices, and statements." In the privacy policy for the service, Intuit said it could collect data from the invoice forms "including items, quantities, terms, customer information, amounts, and the 'from', 'to', and 'cc', and 'subject' lines of the e-mail" and to use that data for support purposes and "to evaluate and improve our service." So not only was Intuit giving itself the right to collect all manner of information about QuickBooks customers, but about the customers' customers as well.

Intuit says it is not in fact doing any of those things, and has no plans to do so. "We don't currently attach anything to the invoices we send through, but [the TOS] does leave us that option," said an Intuit representative. "Per the privacy policy we can monitor how people are using the service, but no personally identifiable information is being collected."

So why did Intuit turn its e-mail invoicing feature into a service requiring a log-in procedure? Actually, the feature always was a service. Although Ms. Billings didn't realize it, the Intuit representative says her e-mailed invoices were going through Intuit's servers even before the log-in procedures were added. "The log-in for the service is built into QuickBooks 2002, but for 2001 we had to slipstream it in," he says. By "slipstream" he means the update Ms. Billings thought she downloaded voluntarily. According to the representative, QuickBooks 2001 users are in fact required to download the update and its associated TOS if they wish to keep e-mailing invoices.

And whereas the TOS allows Intuit to start charging, according to the representative, the Basic Online Billing service will remain free for QuickBooks 2001 customers until the product is "sunsetted." (If Intuit follows its sunsetting pattern, that will come when QuickBooks 2004 is introduced.) At that point Intuit will stop subsidizing the free service -- which he says currently costs the company about a million dollars a year -- and Ms. Billings will have to either sign up for a paid service or upgrade to a newer version of QuickBooks if she wants to continue e-mailing invoices.

Of course, there's no guarantee that future versions of QuickBooks will provide the online billing service for free. If we judge by the history of the payroll tax service, it likely won't be. Considering the fact that Intuit decided from the beginning to route the invoices through its servers and all the rights it claims for itself in the TOS and privacy documents, it's pretty clear where they're going with this. Don't touch that dial -- you never know what it might cost.