August 9, 2001 1:55 PM PDT

E-currency site Flooz goes offline

With Flooz.com's Web site on hold since Wednesday, e-tailers across the Web have stopped accepting the online currency for payment and have left customers wondering if they are holding worthless paper.

The online payment service closed access to account information Wednesday and asked at least one e-tailer to remove links to Flooz as a method of payment.

"We are currently unable to process your transaction," reads a note on the Flooz site. "Check back for further updates. We apologize for this inconvenience."

Flooz Chief Executive Robert Levitan, a co-founder of women's site iVillage, declined to comment Wednesday. On Thursday, Levitan and other company executives were in a meeting and unavailable for comment. A company representative said Flooz planned to release a statement "soon."

Several Flooz investors, including Oak Investment Partners, NextCard and Maveron, did not return calls seeking comment.

The extended shutdown and the lack of communication doesn't look good for Flooz or its customers, said James Van Dyke, an analyst with Jupiter Media Metrix.

"If this isn't a sign that they are dead, it's a sign that they've been killed," Van Dyke said. "If this is a server crash, it's due to something unexpected. I don't see them recovering."

Flooz and other alternative online currencies such as Beenz and eCash have struggled to gain acceptance among customers and merchants. In the last year, both Flooz and Beenz have shifted from targeting consumers to catering to the business market. Late last year, for instance, Flooz began focusing its efforts on the corporate gift-giving market.

Among the companies that pulled down links to Flooz were Tower Records, Outpost.com, Barnes&Noble.com, iGadget.com and Ashford.com.

Ashford spokeswoman Kim Richard said the company pulled the link at Flooz's request: "They asked us to remove it because they've stopped accepting all transactions."

Outpost spokeswoman Cary Eaton did not know when or why the company stopped accepting Flooz. "All we know now is that their site is down, and I know that we're not accepting Flooz at this time," she said.

Customer Mike Weiner said he has about $600 in his Flooz account but has been unable to use it because retailers such as Restoration Hardware are no longer accepting Flooz. Weiner said he was frustrated that he doesn't have access to his account.

"I have not talked to anyone at Flooz," said Weiner, who explained that he bought $1,000 worth of Flooz for $800 through a special promotion by American Express last month. An American Express representative wasn't immediately available for comment.

Barnes&Noble.com spokeswoman Carolyn Brown said "Flooz is having difficulties, and in the best interest of our customers we've taken it off our site until the problems have been resolved. They are supposed to put a statement out soon."

Restoration Hardware stopped accepting Flooz in mid-June, but that was due to "communication problems," not because of a request from Flooz, said Jonathan Plotzker, Restoration Hardware's director of e-commerce.

Restoration's third-party fulfillment service and Flooz were having problems authorizing and settling payments using Flooz, Plotzker said. Although customers were still receiving goods they ordered, they sometimes wound up with more money in their Flooz accounts than they should have, he added.

Flooz has raised more than $35 million from investors.

 

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