Flooz.com is Founded
Flooz.com was a dot-com venture, now defunct, based in New York City that went online in February 1999, promoted by comic actress Whoopi Goldberg in a series of television advertisements.
Started by iVillage co-founder Robert Levitan, the company attempted to establish a currency unique to Internet merchants, somewhat similar in concept to airline frequent flier programs or grocery store stamp books. The name "flooz" was based upon the Arabic word for money, فلوس, fuloos. Users accumulated flooz credits either as a promotional bonus given away by some internet businesses or purchased directly from flooz.com which then could be redeemed for merchandise at a variety of participating online stores. Adoption of flooz by both merchants and customers proved limited, and it never established itself as a widely recognized medium of exchange, which hindered both its usefulness and appeal.
The company announced its closure on August 26, 2001, perceived as an early indicator of the growing dot-com bust. Upon the company's closing, all unused flooz credits became worthless and nonrefundable. Over its short history, flooz.com reportedly exhausted from $35 to $50 million in venture capital.
Evidence indicates the company was at least partly brought down by fraud. In 2001, Flooz.com was notified by the Federal Bureau of Investigation that a Russian organized crime syndicate was using Flooz and stolen credit card numbers as part of a money-laundering scheme, in which stolen credit cards were used to purchase currency and then redeemed. Levitan has stated that fraudulent purchases accounted for 19% of consumer credit card transactions by mid-2001.
For every good dot-com idea, there are a handful of really terrible ideas. Flooz.com was a perfect example of a "what the heck were they thinking?" business. Pushed by Jumping Jack Flash star and perennial Hollywood Squares center square Whoopi Goldberg, Flooz was meant to be online currency that would serve as an alternative to credit cards. After buying a certain amount of Flooz, you could then use it at a number of retail partners. While the concept is similar to a merchant's gift card, at least gift cards are tangible items that are backed by the merchant and not a third party. It boggles the mind why anyone would rather use an "online currency" than an actual credit card, but that didn't stop Flooz from raising a staggering $35 million from investors and signing up retail giants such as Tower Records, Barnes & Noble, and Restoration Hardware. Flooz went bankrupt in August 2001 along with its competitor Beenz.com.
Market Crashes: The Dotcom Crash