Digital River Runs Dry (theregister.com) 14
Digital River has not paid numerous merchants since midsummer for software and digital products they sold through its MyCommerce platform. The Register: "After over 20 years of partnership with Digital River, Traction Software Ltd has been left feeling as though we've been 'rug pulled,'" Lee Midgley, managing director of Traction Software, told The Register. "For the past three months, we've experienced a complete halt in software sales revenue payments with no support, no direct contact, and only additional terms and conditions designed to delay resolution and extract more money from us.
"Astonishingly, Digital River continued to take sales from our loyal customers until we removed them from the order system. It now appears they have no intention of making payments and may be entering a liquidation process under a new CEO who has been involved in similar situations before."
The new CEO, Barry Kasoff, was first noted on the e-commerce biz website in August. Kasoff is also listed as the president of Realization Services, "a full-service strategic consulting firm specializing in turnaround management and value enhancement..." The privately-owned, Minnesota-based business appears to have laid off a significant number of employees, presumably the result of what its UK subsidiary describes as cost reduction initiatives implemented in late 2022.
"Astonishingly, Digital River continued to take sales from our loyal customers until we removed them from the order system. It now appears they have no intention of making payments and may be entering a liquidation process under a new CEO who has been involved in similar situations before."
The new CEO, Barry Kasoff, was first noted on the e-commerce biz website in August. Kasoff is also listed as the president of Realization Services, "a full-service strategic consulting firm specializing in turnaround management and value enhancement..." The privately-owned, Minnesota-based business appears to have laid off a significant number of employees, presumably the result of what its UK subsidiary describes as cost reduction initiatives implemented in late 2022.
Your payment processor is not a bank! Surprise! (Score:5, Insightful)
I cannot imagine a more business destroying move than to be a payment processor that collects money from the customer and stiffs the vendor.
It's not even possible to do this in the current us regulatory environment unless your business is doing some horribly shady shit like comingling customer funds with operating accounts.
Imagine if one day Visa just said, oh we are gonna keep the funds from these 750 million daily transactions to ourselves for 3+ months.
Re:Your payment processor is not a bank! Surprise! (Score:5, Interesting)
Usually distributors take payment from customers and then pay the vendor on different terms. They also make a markup on what they sell. If you buy a left-handed widget from digital river for $10, they might only pay $8 to the vendor (which is how they make a profit.) They might have negotiated net/60 with the seller but sell to the buyer on net/30. Or they might even finance to the buyer over the course of a year (making money on the financing.)
In some cases, the buyer may have paid Digital River with Visa/MC. But it doesn't matter. As a vendor, you are an unsecured creditor of the distributor. When K-Mart went bankrupt, many vendors lost out.
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For those vendors supporting DRM, they should revoke those licenses. Force the customer to ask for a refund.
Re:Your payment processor is not a bank! Surprise! (Score:4, Insightful)
For those vendors supporting DRM, they should revoke those licenses. Force the customer to ask for a refund.
That is really going to go well, how is the customer supposed to get blood from a stone? I'm not sure it's even legal.
Mind you, what Digital River appears to be pulling here is not legal in most countries either, and whoever is responsible (Barry Kasoff?) would need to be held responsible. Traction Software Ltd should maybe have been quicker to pull the plug - especially if they had some warning - but after a 20 year relationship, there was probably a certain amount of trust involved.
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It seems DR has been pulling some shenanigans for some time. Witness this exchange [paypal-community.com] on PayPal's site from last year.
Re: Your payment processor is not a bank! Surprise (Score:2)
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Trust in people. Do not trust in organizations. (Score:3)
Organizations are far too easily corrupted, as this example shows.
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Good luck with that.
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I happen to agree. Example: Russia. People put a lot of trust in one person (Putin), allowing him to subjugate institutions to follow his will alone. Guess what happened?
Now they care? (Score:2)
with no support, no direct contact, and only additional terms and conditions designed to delay resolution and extract more money from us.
That's exactly what customers were getting from digitalriver. Why are they surprized that digitalriver would do it to them too given the opportunity?
When their 'loyal customers' were getting screwed over by digital river they didn't give a fuck.
Digital River never had any customer care, communication, or anything like that.
I blame Apple. (Score:2)
How many electronic software payment companies have to go under before we acknowledge as a society that letting a company require that all payments for software and in-app purchases on their major software platform go through them is anticompetitive and causes entire markets to collapse?