Read about Flooz.Com

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E-currency site Flooz goes offline
By CNET News.com Staff
August 9, 2001, 12:55 p.m. PT
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.

[sydnie]

August 10, 2001

Internet Cash Company
Suspends Its Operations

By JAYSON BLAIR

Flooz.com an
Internet company
that offered online
currency that could be
used at dozens of
World Wide
(news/quote) Web
sites, has shut its Web
site and is considering
ceasing operations,
executives close to the company said yesterday.

The company, based in Silicon Alley in
Manhattan, has stopped accepting its online
currency for payment, leaving many customers
wondering whether they are holding worthless
virtual paper.

Company officials declined to comment on the
Web site or future plans yesterday. The site
displays a message that says: "We are currently
unable to process your transaction. Check back
for further updates. We apologize for this
inconvenience."

The site also lists the e-mail address of its
customer service department.

The company closed its payment service late
Wednesday and asked several online retailers to
remove links to Flooz from their Web sites.
Before the shutdown, consumers could buy the
online currency and use it on Web sites,
including barnesandnoble.com (news/quote),
Outpost and Tower Records.

Carolyn Brown, a spokeswoman for
barnesandnoble.com, said that her company had
been asked to remove its link to Flooz, and that
executives had been told that Flooz would soon
issue a statement on the troubles. "Flooz is
having difficulties, and in the best interest of our
customers we've taken it off our site," she said.

Flooz is not the only online currency company
facing problems, analysts said yesterday.
Beenz.com and eCash have also struggled to
attract consumers and merchants, who have been
wary of doing business through the services. In
recent months, Beenz and Flooz have both
shifted to aiming at the business market inside of
individual consumers.

"It is a product that is neat from a consumer and
technological perspective," said Rob Leathern, a
commerce analyst with Jupiter Media Metrix
(news/quote), an Internet research firm based in
New York. "But there is something even better,
and it's called cash, and you can use it almost
anywhere."

He added: "From a merchant's perspective, they
have to enhance their systems to accept it, and it
is not like they don't have enough things to worry
about already."

Flooz is most well known for an $8 million
advertising campaign starring Whoopi Goldberg.

The company was founded by Robert Levitan, a
co-founder and former executive at iVillage
(news/quote), a women's Web site. Mr. Levitan,
the chief executive of Flooz, started the company
in March 1999 with the idea of permitting Web
surfers to buy online currency on the site and
e-mail it to friends, family members and
colleagues. The name Flooz came from a term
used for cash in the markets of ancient Persia,
company officials said at the time.

Flooz raised more than $35 million from
investors, including Oak Investment Partners,
Brentwood Venture Capital, Maveron Equity
Partners and Venture Strategy Partners.

While the online currency caught on with some
notable retailers, officials at those companies said
it had proved more difficult than they had
anticipated. Analysts said that the online currency
had not caught on with consumers.