coderanger.com blog

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Remember Flooz?

Do you remember Flooz? It sold dollars that could be exchanged for gifts. Whoopi Goldberg stumped for it and Flooz survived the implosion of 2000. Then in 2001, one of its biggest customers, Cisco Systems, wanted to renegotiate a multimillion-dollar contract. Flooz survived that as well.

Then the company noticed that gift buying didn’t slow down after the Mother’s Day/Father’s Day/graduation season. The FBI informed Robert Levitan (CEO who also started iVillage.com) that the Russian mobsters were buying Flooz credit as a way to launder stolen credit card purchases. Flooz survived that, too. Then the large credit card companies decided to withhold payments, in part, says Levitan, because Flooz was able to garner a higher percentage of each transaction than they were.

The company was forced to file for Chapter 7 bankruptcy protection. It had 325,000 creditors, the largest number of creditors ever. The court allowed it to notify creditors via e-mail, a first. Levitan expected to face a hostile audience of several angry consumers at the first court hearing.

“No one showed up,” he said. The company called it quits on Sept. 10. On his first day of unemployment in years, Levitan decided to go to his Manhattan gym, where he saw the disaster of Sept. 11, 2001, unfold.