New York-based Flooz.com, an online gift currency that had made substantial inroads in the corporate incentive market, has ceased operations permanently, following a temporary shutdown earlier this month when the company was in discussion with possible merger partners. Flooz also reports that it was hit by $300,000 in fraudulent transactions charged to stolen credit card numbers.
“Flooz ended its merger discussions without a suitable partner who could continue to operate the site and allow people to spend their Flooz credits,” Robert Levitan, CEO, tells Internet Retailer. Flooz filed for Chapter 7 bankruptcy, under which it will liquidate assets and reimburse creditors if there is money to do so.
A message posted Sunday night on the web site stated: “We regret to inform you that Flooz.com, Inc. has ceased operations. The offices are closed and the company will file for bankruptcy protection. Flooz.com has been adversely affected by dramatic changes in capital markets and the general slowdown in the economy. Flooz.com had been in merger discussions with a number of companies but was unable to find a suitable partner. We wish to thank all of our customers, merchant partners, service providers, employees and investors for their support.”
While the company says it suffered in an unfavorable economic climate, credit card fraud also played a part in its demise. “We have been the victims of organized credit card fraud,” says Levitan, who says Flooz was hit for $300,000 for transactions charged to card numbers stolen by an international crime ring. The company’s credit card processor was holding $1 million in Flooz’s funds to cover chargebacks, says Levitan.
Flooz had 65 merchants accepting its currency until early August when it notified them of temporary shutdown. The company did not disclose the number of Flooz credit holders or the amount of Flooz credit outstanding. A source close to the company says consumers may be able to recover credit by requesting a refund from their credit card companies, especially since the processor had held $1 million for such chargebacks earlier this month.