Flooz.com
Flooz.com (Flooz) is a company started by iVillage co-founder Robert Levitan, the company attempted to establish a currency unique to Internet merchants, somewhat similar in concept to airline frequent flier programs or grocery store stamp books.
The name “flooz” was based upon the Arabic word for money, fuloos. Users accumulated flooz credits either as a promotional bonus given away by some internet businesses or purchased directly from flooz.com which then could be redeemed for merchandise at a variety of participating online stores. Adoption of flooz by both merchants and customers proved limited, and it never established itself as a widely recognized medium of exchange, which hindered both its usefulness and appeal[1].
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Flooz Review
In August 1998, Robert Levitan and Spencer Waxman founded a company to sell gift certificates online. The principle of operation was very simple – use of Internet has gained the certificates, a special currency – flooz that also it was possible to spend on the Internet. Each fluz was equal to $1.
Then the certificate was sent by e-mail to the recipient, who then could order goods from partner stores, such as Books.com, Barnes & Noble and others. The idea was promising: every person who orders goods via the Internet, a potential client. This did not have to Shine your credit card! The first two years the company really gained momentum. It was important that the service was free for users, and the company received the main income from transactions charged to stores. But payments were small, so retailers actively supported the new service.
The only thing that the creators did not pay due attention to — the security system. A series of illegal purchases with stolen credit cards, carried out by Russian and Filipino hackers, demanded the urgent blocking of the system. Customers started complaining about the money disappearing and cooperating stores refused to accept it as a currency. In the end, Flooz.com are unable to overcome all problems and in 2001, declared bankruptcy.
Crowdfunding
Flooz.com sold online currency that could be used instead of credit cards. After users bought enough Flooz, they could spend it at participating online stores like Tower Records, Barnes & Noble, Outpost.com and Restoration Hardware. Despite the stupidity of its concept, Flooz.com raised $35 million from investors. Corporate partners Cisco and Delta Air Lines used Flooz for corporate gifts.
And despite spending $8 million on an ad campaign featuring Whoopi Goldberg, Flooz went bankrupt in August 2001, less than two years after it opened its virtual doors.
Use by crime syndicate
In 2001, Flooz.com was notified by the Federal Bureau of Investigation that a Russian organized crime syndicate was using Flooz and stolen credit card numbers as part of a money-laundering scheme, in which stolen credit cards were used to purchase currency and then redeemed. Levitan has stated that fraudulent purchases accounted for 19% of consumer credit card transactions by mid-2001[2].
Closure
The company announced its closure on August 26, 2001, perceived as an early indicator of the growing dot-com bubble bust.