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Why was a scam company able to raise $76 Million Series B?

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Re: Why was a scam company able to raise $76 Million Series B?

#91

Post by keammo1 »

tisme wrote: post #9

Don't ask for a refund, go to your bank or CC company and charge back the 6 months. That'll hit them where it hurts. Little known fact about chargebacks: the merchant pays an administration fee, typically $20 to $50. Per charge! That is why the smarter scammers refund to everybody who complains, not refunding is plain dumb. This scam has been around for a long time, usually it's adult companies that sell you a 'free'…

I definitely second this. I used to work a children's website, where kids would often take their parents' credit card and make purchases, and we'd inevitably end up with many chargebacks (even though we offered refunds, many people went straight for the chargeback option instead of contacting us). The chargebacks not only cost the company extra - even if the company wins the dispute - and if chargebacks happen too frequently, banks may shut down the account.

I have also won 3 chargebacks against companies who never delivered their product or used deceptive practices. The process was not too difficult, and I believe the CC companies tend to side with the consumer. Verdicts on the disputes can take several months to process though.

Re: Why was a scam company able to raise $76 Million Series B?

#92

Post by tedunangst »

trimbo wrote: post #73

So basically this is the Columbia House[1] of shoes. That's not a scam, it's "a catch". When a consumer hears the pitch -- in the case of Columbia House, it was "get 8 CDs for 1 penny", in the case of JustFab it's "get any pair of shoes for $39" -- they should be asking what the catch is. An ungodly number of businesses involve catches to survive. How about cell phones? That new iPhone is only $200... but you have a…

Columbia House was always upfront about the fact that your 8 CDs were merely the start of your membership, and they would send you a CD every month. If this site were at least sending you a pair of shoes you didn't want each month, you'd catch on a lot faster to the fact you're now part of a club.

Re: Why was a scam company able to raise $76 Million Series B?

#93

Post by [deleted] »

simias wrote: post #87
nsns wrote: post #52

Earlier quoted context omitted.

I agree it's unethical. This is a commercial site, it tries to offer goods in exchange for money, anything that costs money should be emphasized and explained. How would they feel if someone managed to take some of their merchandise by stealth? I don't think this is some grey area: if you tricked me into paying a sum I never chose to pay, you're stealing money off my pocket.

That reminds me of certain ads I sometimes see on the french TV for ringtones or silly phone games: if you read the small print you realize they actually offer a membership, not a product, and you actually pay something like 3 euros a week instead of a one-time fee. They call that "clubs" or something. Those ads usually seem to target teenagers (they're mostly on music channels or channels aimed at kids) who probably…

[deleted]

Re: Why was a scam company able to raise $76 Million Series B?

#94

Post by marshray »

Vivtek wrote: post #51
jonnathanson wrote: post #8

This business model reminds me of those fly-by-night mobile subscription services from the early 2000s. The ones who'd make you think you were buying a single ringtone, and the next thing you knew, you'd been surreptitiously signed up for a $29.99/month subscription. I remember evaluating the books for one of those companies back in the day. It was wildly successful at the surface level. But if you dipped below the s…

That business model is alive and well in Hungary. A single SMS was sent from my phone in August (nobody in the family knew anything about it, so we can only assume it was sent by somebody else who may have gained access to the phone while the kids took it to day camp). This SMS "authorized" three different companies to send me "premium SMSs", each of which cost $2.50 (roughly, converted to USD). My phone's a prepaid,…

But you're not powerless. I (and I'm sure many others here) are purchasers of mobile servcies and are influential in recommend them to others.

I currently have T-Mobile in the US and haven't had the problem you describe, but based on your story I'll probably be a bit more willing to shop around next time I need to change my contract.

Re: Why was a scam company able to raise $76 Million Series B?

#95

Post by tisme »

mseebach wrote: post #88
tisme wrote: post #9

Don't ask for a refund, go to your bank or CC company and charge back the 6 months. That'll hit them where it hurts. Little known fact about chargebacks: the merchant pays an administration fee, typically $20 to $50. Per charge! That is why the smarter scammers refund to everybody who complains, not refunding is plain dumb. This scam has been around for a long time, usually it's adult companies that sell you a 'free'…

Don't forget that doing a chargeback doesn't absolve you from having to pay for services you've legitimately signed up for, it just denies the parties the convenience of settling through the credit card companies. They can take you to court for breach of contract, and if (IANAL) the subscription contract is found to be legit, you have to pay + fees.

That is true in theory, but in practice, especially in situations like this that does not happen.

For that there would have to be a much more transparent sign up process and actual delivery. Non-performance is not a good basis to start a law suit, especially if you're on the non-performing side.

Re: Why was a scam company able to raise $76 Million Series B?

#97

Post by tedunangst »

Ntrails wrote: post #27
jonnathanson wrote: post #8

This business model reminds me of those fly-by-night mobile subscription services from the early 2000s. The ones who'd make you think you were buying a single ringtone, and the next thing you knew, you'd been surreptitiously signed up for a $29.99/month subscription. I remember evaluating the books for one of those companies back in the day. It was wildly successful at the surface level. But if you dipped below the s…

It reminds me more of the book catalogues. 5 books for a pound or something as a joining perk, but you then had to buy a book a month for 6 months or they would automatically sell you the default book etc. I never thought that was a shady business model, per se, and whilst it wasn't entirely intuitive how they worked to a 14 year old, I blamed myself for screwing up by joining- not the company.

When books you didn't order start showing up in the mailbox, you pretty quickly catch on to what's happening. Charges that just show up on your credit card statement are a lot less obvious to most people.

Re: Why was a scam company able to raise $76 Million Series B?

#98

Post by tisme »

keammo1 wrote: post #91
tisme wrote: post #9

Don't ask for a refund, go to your bank or CC company and charge back the 6 months. That'll hit them where it hurts. Little known fact about chargebacks: the merchant pays an administration fee, typically $20 to $50. Per charge! That is why the smarter scammers refund to everybody who complains, not refunding is plain dumb. This scam has been around for a long time, usually it's adult companies that sell you a 'free'…

I definitely second this. I used to work a children's website, where kids would often take their parents' credit card and make purchases, and we'd inevitably end up with many chargebacks (even though we offered refunds, many people went straight for the chargeback option instead of contacting us). The chargebacks not only cost the company extra - even if the company wins the dispute - and if chargebacks happen too fr…

That's pretty accurate. As far as the verdicts are concerned, yes, they can take a while to process but if a company gets a negative reputation the process tends to be expedited considerably.

Re: Why was a scam company able to raise $76 Million Series B?

#99

Post by fffggg »

PeterisP wrote: post #86
lopatin wrote: post #54

Earlier quoted context omitted.

I have no idea how complicated this is, but with 76 million in funding, what are the chances they found a way to process credit cards them selves?

It's not nearly enough. Some major conglomerates (If I recall correctly then GE, GM, Samsung and others) do stuff like that in-house by creating bank-subsidiaries in their largest markets, but I'd guess that it would be reasonable at 78 billion revenue, not 78 million.

That's just to become an acquiring bank, to save on exchange fees.

Ultimately VISA determines who gets to participate in the VISA credit exchange network and will fine acquiring banks who participate in things like this. No one can force their way in and avoid responsibility -- period.

Re: Why was a scam company able to raise $76 Million Series B?

#100

Post by tisme »

PeterisP wrote: post #86
lopatin wrote: post #54

Earlier quoted context omitted.

I have no idea how complicated this is, but with 76 million in funding, what are the chances they found a way to process credit cards them selves?

It's not nearly enough. Some major conglomerates (If I recall correctly then GE, GM, Samsung and others) do stuff like that in-house by creating bank-subsidiaries in their largest markets, but I'd guess that it would be reasonable at 78 billion revenue, not 78 million.

And even then that's not the whole chain. After all, a GE capital card is backed by another card company:

http://www.gemoney.com.au/en/credit_cards/index.html

Piss off VISA/MC/JCB/AMEX and you're in trouble.

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