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New Regus Billing Blunder Has Customers Terminating Their Office Contracts Immediately

Notification of late payment 5 days before the payment is due?

· Regus,Attorney,Contract Management,Office Lease

When is your next Regus payment actually due? Do you know? Does Regus?

On a beautiful late spring afternoon, about two months ago, a financial advisor received an email from Regus--although he did not yet know it was from Regus. From inside his pocket, his phone vibrated once to alert him of a new email. It was April 25th, and he was just about to finish up a meeting with a client at Sightglass on 7th Street, his favorite coffee shop in San Francisco. It was supposed to be a happy time.

regus breach of contract

As their conversation neared the end, his client paused and stepped away from the table for a minute to get a quick refill before he headed out. Remembering the email notification, the financial adviser reached into his pocket for his phone. At first, all he saw was the email subject:

Action required. Your services may be suspended

Fight-or-flight mode kicked in and instantly chased away the prior good vibes. “Financial advisor’s are supposed to be good with money,” he thought. “We don’t miss payments or let services we want or need get suspended.”

Who was this email from? He opened it up.

GOOD GUY FINANCIAL ADVISOR
One Market, Spear Tower, 36th floor
San Francisco, CA 94105
United States of America

 

Dear Customer

 

Your account remains overdue. Please settle your account without further delay. Failure to pay in 24 hours could result in your services being suspended.

 

Click here to pay now

 

Regards,

Your account support team

The email was from Regus.

But why was he receiving this email now, on the 25th of the month, or even at all?

His client returned, chatted for a few more minutes, and then said goodbye. The financial advisor immediately returned to his phone to read the email again. It still did not make sense to him. As far he could recall, he had not missed a rent payment, and the next payment period did not begin for another 5 days, on the 1st of May.
 

Why had Regus sent him this email? The email said: “Your account remains overdue.” He thought that was strange, since he did not remember receiving any prior notices of upcoming or late payments. He checked his inbox and quickly confirmed that this was the first such notice he had received from Regus. “If this is the first email Regus sent me about a payment, why would they use the word “remains?” It just seems strange, as in, there must be some mistake.”

He opened a browser window and logged into his MyRegus account to check his account balance and payment history, and what he found was weird: all payments had been paid on time, and his account balance was $0.

regus customer service

Was this an automation error or a strategic threat?

Having received the same email under the same circumstances, another Regus tenant wasn’t sure either. So he asked the area manager for his Regus office.

The manager told me that their automated system makes mistakes and that it's my responsibility to contact them if I receive a notice in error, and I would still need to pay the "Restoration Fee." I was responsible for their mistake, only because I didn't notify them of it. She told me if I had contacted them and told them they sent me an incorrect notice before I was disconnected, I would not have to pay the "Restoration Fee.

Crazy, right? You don’t have to be a legal expert to see that Regus’s reported policy of charging its clients add-on fees whenever those clients fail to notify Regus of its errors is crazy.

There are many Regus customers--maybe even most--who receive the premature past-due email, fear having to pay late fees or other extra fees like the so-called “Office Restoration Fee,” and just give in to Regus’s threat. They pay next month’s payment, five days before it is due, because Regus threatened them.

Here is another Regus customer story.

It answers the question, “What might happen if you received this email, assumed it to be a mistake, and just forgot about it?” Sometimes, Regus follows through on its threats.

This Regus customer, as in the first two stories, received the same premature past-due email. Then, about 36 hours later, she received an email saying that her service had been suspended.

I recently received a suspension of service notice saying that I would need to pay a past due payment, but I disregarded it as it was sent erroneously. I had already paid that month’s rent and I even checked to make sure I was signed up properly and had no other payments needing to be made.

This was an email saying that service had actually been suspended, after the recipient failed to make that allegedly past-due payment after 24 hours. So Regus has apparently followed through on these threats in some cases, which makes it not only harder to believe that it was a mere billing error, but that your business is not at risk whenever you receive a similar notice.

This happens to thousands of Regus customer every month.

While we cannot be sure why Regus sends these emails to clients whose payments are not actually past-due, we can speculate. The financial advisor whose own case inspired the first story above said something like…

Why do you guys send late payment emails before monthly payment is due (the first of month)? Is Regus in that bad of financial shape?

This is probably the right question to be asking, not because we expect Regus to answer it, but because the questions assumes what is probably the actual answer. By a number of measures, subjective and objective, Regus is struggling.

regus takeover

According to industry flexible office publication Allwork, “Starting December, 2015 the market value of Regus Plc (now called the International Workplace Group Plc) has seen roughly a 25% drop.”

But the weird thing is: over that same period, revenue has been steadily rising.

So now we have three questions.

  1. Why is Regus sending late-payment notices to customers who are not late?
     
  2. Why is Regus’s market value continuing to decline?
     
  3. Why is Regus’s revenue continuing to rise?

Again, we can only speculate...but what if all three of these questions are in fact related? We think they are.

For obvious reasons, sending a late-payment notice to your customer who is not late is not a good idea if you care about how your customers feel about you.

Yet Regus sends these emails. And our theory is that Regus sends these emails, on the 25th of the month, alleging that the customer is late, and threatening to suspend services in 24 hours, because they need the cash more than they need the relationship.

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Regus has been shopping around for a buyer since last year, failing to seal a private-equity buyout in December 2017, and making it clear since then that they are looking to sell. The more cash Regus can show on the books now, the more attractive it can make itself appear to a potential buyer.

Regus is fully aware of the army of detractors it has earned itself over the years, spawning sites like Regus-Sucks.com and legal services like Veeto (who handles thousands of Regus cases every month). Regus knows that there is no way to get those detractors to go away anytime soon.

regus review

So why pretend that customers like you if it is clear that they don’t?

If you are really good at being the bad guy, then why pretend to be the good guy?

Regus shamelessly sends out those late-payment emails every month…

  • Knowing that the alleged past-due payment is not actually past-due, and
     
  • Knowing that, by threatening to suspend services in 24 hours, Regus is opening itself up to a massive loophole disgruntled customers can use to terminate their Regus contracts immediately, and without penalty.

The reason Regus has so far been willing to take that risk is that not very many people were familiar with what I am about to tell you, which is how you can legally terminate your Regus contract early when you receive one of these dubious late-payment emails.

A good old-fashioned legal disclaimer: I am not your attorney, and this is not legal advice. I have handled thousands of Regus cases, however, and I am happy to share some things I have learned along the way.

When Regus threatens to suspend your service in 24 hours, you could terminate immediately on the grounds that Regus’s threat is either an anticipatory breach, a breach of contract, or both.

Let me explain what that means and how I have seen it used.

Most legal systems in the world have the concept of "anticipatory breach of contract."

This concept has its roots in common law. When one party to a contract clearly says that it does not intend to perform its obligations, then the other party can no longer be expected to “remain ready” to perform a one-sided deal (remaining in your Regus office, for example, after Regus threatens to kick you out in 24 hours). In these cases, many jurisdictions therefore consider the injured party's duties to be, at a minimum, discharged--meaning that, in our example, you could terminate your Regus contract immediately with out penalty.

Even short of an outright statement that one party does not intend to perform its obligations, the serious possibility of one party's non-performance and the accompanying threat of injury to the other will, in certain circumstances, necessitate legal protection.

But, of course, we have an outright statement in this Regus example. Weird, right? Read on.

Option # 1: Breach of contract by Regus

If you read your Regus contract, then you will see that it references either “terms of service” or “house rules,” depending on where you are in the world. Go there, and find the clause that speaks to Cancellation requirements. You will see that your contract length (12 months, 24 months, month-to-month, etc.) determines how much advance notice either you or Regus must give before you terminate the contract.

Like most adhesion contracts, Regus contracts are littered with ambiguous and contradictory terms, particularly when it comes to cancellation requirements. Although you might understand there to be a relationship between your contract length and the number of days in advance that either party must give the other before terminating, you might be unsure exactly how many days of advance notice apply to you. (Welcome to the club: we’ve all been wondering for a while whether Regus hires politicians--equivocation specialists--to draft its contracts.)

In any case, though, we can identify a minimum notice requirement of 14 days for certain types of notices and 1-month to 3-month notices for other types.

Thus a threat to suspend service in 24 hours threatens to violate the terms dictating notice requirements. So, legally, if Regus were to make good on that threat and suspend your services for non-payment (of a payment that is not actually due for another 4 days), then you might have a claim for breach of contract against Regus.

 

Further, if it turns out that Regus suspended your services based on the false allegation that you remained past-due, then you might have another argument for breach of contract, as, you were not late--and therefore held up your end of the bargain--yet they suspended your services--and therefore failed to hold up their end of the bargain.

 

The nice thing about a breach of contract claim is that you might be able to terminate the contract and also sue for damages--for example, whatever costs you incurred as a result of Regus’s breach, like relocation expenses, economic losses from interruption of your business operations, and any higher expense you might have to pay for a replacement office during the period of your breached Regus contract.

The bad thing about a breach of contract claim is that you might not care about collecting damages enough to forgo your chance to leave Regus immediately, which is what you would have to do, since you cannot leave until an actual breach occurs--and it might be harder to argue that a mere threat to breach the contract--”Failure to pay in 24 hours could result in your services being suspended”--is actually a breach, yet.

Still, learning this must feel like stumbling into the promised land for you, right?

regus breach of contract

Option # 2: Anticipatory breach by Regus.

The form of Regus’s premature late notice is arguably an anticipatory breach. Why? It threatens explicitly that Regus could cease performing its duties under the contract if you fail to perform duties you do not yet have.

So, if I am that financial advisor in San Francisco, and I run a company that employs 20 people at my Regus office, the threat of suddenly being locked out of our office could be detrimental for my business. It would present me with not only a logistical nightmare--how to find a new office for 20 people immediately--but would also likely disrupt our vital business operations, like meetings with clients and preparing financial analyses in between meetings.

I would have reason to fear real harm to my business, if I believe that Regus could possibly follow through on this threat.

Hint: option 2 is probably your best bet if you are looking to leave Regus immediately.

Let’s suppose that you want to get out of your Regus contract as soon as possible, and you receive one of these premature late-notices.

What should you do? You should act fast, but carefully.

You need to draft and send a termination notice to Regus right away, probably within 2-3 days of receiving it. Note that termination notices need to be drafted carefully. Otherwise they may be considered invalid. To get it right, you might want to use Veeto or an attorney to help you draft the termination notice that you need to send to Regus.

Keep in mind that laws may vary by jurisdiction, and that could affect how a case of anticipatory breach is adjudicated. With this in mind, consider whether you prefer the more aggressive approach--which is to terminate immediately--or the safer approach. The safer approach might be to draft and send a letter to Regus that demands assurances that Regus will not suspend your service, and you could elect to give Regus the same 24 hours to comply that they gave to you in their premature late-payment email. On the 25th hour, if Regus has not responded with written assurances that it does not intend to suspend your service, then you would terminate immediately. The downside of the safer approach would be that Regus could always give you that assurance, and thereby defuse your basis for terminating the contract and leaving. So it is a risk, but a different kind of risk.

By terminating immediately, you risk Regus arguing that their notice to you was not an anticipatory breach. By asking for assurances, you risk Regus giving them to you, which would wipe out your reason for terminating.

So wihch risk you choose really just depends on what your goal is: staying if must or leaving if you can.

What do attorneys think about this tactic?

Regus leases space to many attorneys. So it was not hard to get an attorney to weigh in on this billing blunder. We asked what one attorney thought about this seemingly widespread billing error?

Regus uses deceptive practices to collect alleged delinquent rent and other fees from tenants. This practice goes beyond a simple technical error of a billing system. It has real costs to Regus tenants, financial and otherwise, because a sudden suspension of the services that customers pay Regus for, including being denied access to your place of business, can ruin the reputation of a small business when their clients show up to a scheduled meeting only to learn that the business has been “locked out” of the office due to being delinquent. Even though the business is in fact not delinquent, its client does not know that. As a Regus tenant and business owner myself, I just want stability and uninterrupted access to my office. I pay Regus on time. But it seems like, every month, we get hit with a late payment notice, which includes a threat to suspend my office access in 24 hours.

Takeaway

If Regus threatens to cease providing your services, through no fault of your own, this might be grounds for you to terminate your contract immediately on the basis of an anticipatory breach by Regus.

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