No matter how much it hurts I suggest that you look to the future and let the memberships expire normally, paid or not by iBill. Believe it or not, users may not want to fill out that join form again, and may even be pissed at you for making them do it. Sending them a note that you will honor their membership including recurring even if iBill does not end up paying will do a lot, and shows the user you value them and their time. You will earn big points for not dragging them into a situation that is basically Webmaster vs. iBill.
Since I have already been through this four times, I can tell you what will happen if you drop your members a note and explain why they don't have to worry about their account. First you have just made their day; they never thought you cared about them past their membership fee. You will burn up the water cooler with talk of this company that did the right thing in the face of being done very wrong. Many, all on their own, will cancel their recurring and convert to a longer based membership or a higher priced membership. You will get notes when they do, saying things like "I hope this helps out". Since our site Chatropolis.com is a community site, we get offers from our users for all sorts of help. I even got radio time in South Africa from a user who is a DJ there.
Nobody likes getting screwed, and the money you will probably loose is very real. You pretty much know how much you will loose by just letting it happen, and doing everything you can to switch providers, etc. But by keeping the user out of it, you just made a friend for life. If there was such a thing as a "Goodwill Calculator" The choice would be clear. But there isn't and this is one of those tough decisions you have to make from the gut. For us at Chatropolis, the choice is clear: bite the pillow and watch a slow steady growth spurt that will last a year or so...
Your image to your customer is everything. If it's that of a money hungry scumbag, and you're happy with that, then this article will make nice scrap paper if printed. But if you want to set yourself apart, and let your members know you care about all unconvinced to them, they will reward you with all sorts of things. Including growth, cash, radio time – and even the occasional Springbok skin.
At Interfun we have several sites that are affected by the iBill problem. We are lighting candles and praying we get paid. I sincerely hope we all make it out with just a few scratches. But if not, it won't be that bad.
Michael Ludwick has owned and operated Chatropolis.com for over ten years. Chatropolis is rated the number one community site for adults by sites like rank.com and Alexa.