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10 Tech Companies That Totally Imploded


5
Flooz
Whoopi Goldberg was paid for her part in a Flooz ad campaign with a stake in the company. © Frank Trapper/Sygma/Corbis
Whoopi Goldberg was paid for her part in a Flooz ad campaign with a stake in the company. © Frank Trapper/Sygma/Corbis

Flooz allowed users to buy a virtual currency (also called flooz) that could be used online in lieu of credit cards at dozens of retailers' sites, such as J. Crew, Barnes & Noble, Restoration Hardware, Starbucks and Tower Records. It was comparable to a gift certificate that could be used at multiple online stores. Companies like American Express even gave out flooz as loyalty rewards. The company raised more than $43 million in investment funds and was endorsed by Whoopi Goldberg, who was paid for a successful ad campaign with a stake in the company [sources: CNET, Trager]. Customers purchased around $28 million in Flooz over 1999 and 2000. But Flooz shut down operations abruptly, and from its customers' point of view, unexpectedly, during August 2001, and shortly thereafter filed for bankruptcy.

People who had purchased but not yet redeemed their flooz were left in the lurch with retailers no longer accepting them as payment. Though things like the low number of retailers accepting the currency and the dot-com bust likely contributed to the company's financial woes, it was also reported that Flooz may have been crippled by criminal activity. An overseas credit fraud ring apparently bought $300,000 worth of Flooz with stolen credit cards, prompting Flooz's own credit-card processor to freeze its accounts. Like many start-ups, it didn't have a lot of capital to fall back on, likely making it difficult for the company to pay out to retailers for customer purchases and hastening its demise [sources: Enos, Tedeschi, Wearden].