Flooz.com Shuts Down, Plans To File For Bankruptcy

  • by August 27, 2001

Flooz.com, which sold online currency used as gift certificates on the web, has ceased operations and plans to file for bankruptcy protection, according to a statement on the private company's web site.

"Flooz.com has been adversely affected by dramatic changes in capital markets and the general slowdown in the economy," a statement on the Flooz.com site (http://www.flooz.com) said.

"Flooz.com had been in merger discussions with a number of companies but was unable to find a suitable partner."

The site did not provide further details.

Internet fraud may have sped its demise, the New York Times reported in its online edition on Monday, citing a person close to the company.

The company unknowingly sold $300,000 of its currency, known as flooz, over the last three months to a ring of credit card thieves in Russia and the Philippines, before being alerted by the FBI, this person said, according to the report.

According to the newspaper report, stolen credit card numbers were used online to buy the flooz currency, which, until recently, could be used as gift certificates at about 30 retail web sites, including those of J. Crew, Barnes & Noble and Tower Records.

The newspaper said a spokesman for the FBI, citing the bureau's policy, declined to say whether it was investigating.

Flooz.com's credit card processing company, which Flooz.com executives would not identify, also alerted the company about the fraud, after Flooz.com charges showed up on the monthly statements of people whose credit cards, or card numbers, had been stolen, the newspaper said.

Robert Levitan, Flooz's chief executive, declined to comment on whether credit-card fraud had been detected, the newspaper said.

Reuters

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