Flooz.com Inc. said it has ceased operations and plans to file for bankruptcy protection, blaming “dramatic changes” in the capital markets and the U.S. economic slowdown.
Flooz chief executive Robert Levitan said that the company had been in merger discussions with a number of companies but “those discussions did not result in the sale of the business.” Mr. Levitan declined to name which companies had been involved in the talks.
Flooz took down its online gift-currency service earlier this month. The Flooz currency is intended to be used at the company’s many partner sites — acting essentially as a gift certificate that can be used at multiple stores. The company’s partners included Barnes&Noble.com Inc. (BKS) and J. Crew Group Inc. With the service offline, Flooz currency that has been purchased can’t be redeemed.
Flooz isn’t the only newfangled currency to fail. Beenz shut down its system over the weekend.
Flooz will file for bankruptcy protection as it continues to wind down operations, Mr. Levitan said. “We have decided that there’s no other choice,” he said, adding that all employees have been terminated.
Mr. Levitan declined to comment on how the bankruptcy proceedings will affect Flooz customers seeking refunds. Flooz customers who paid by credit card may be eligible for reimbursement by their credit-card company. At least one credit-card company has set aside $1 million in Flooz funds for customer reimbursement purposes, according to people close to Flooz.
Separately, Mr. Levitan confirmed that the company had struggled with credit-card fraud. The New York Times reported Monday that Flooz’s demise may have been accelerated by a ring of thieves in Russia and the Philippines, who charged $300,000 in Flooz to stolen credit cards in the past three months. “We did deal with some of those issues. I can’t provide more detail,” Mr. Levitan said.
Copyright (c) 2001 Dow Jones & Company, Inc. All Rights Reserved.
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