FTD Parent Co UNTD being Investigated for Possible SEC Violations

[CHR]

Press release today:
United Online, Inc. under shareholder investigation over possible securities laws violations

16.02.2011 21:49:58 Investigation for investors in shares of United Online, Inc. (NASDAQ:UNTD) over possible violations of securities laws announced - UNTD stockholders should contact the Shareholders Foundation at [email protected]

(live-PR.com) - Following a recent Senate report concerning “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers” an investigation on behalf of United Online, Inc. UNTD over possible Securities Laws violations by United Online and its Chairman and CEO Mark R. Goldston was announced.

If you purchased United Online, Inc. (NASDAQ:UNTD) stock, including those who purchased UNTD shares between May 1, 2007 and November 17, 2009, and/or if you have any information relating the investigation including those who are former employees and/or whistleblowers, you have certain options and you should contact the Shareholders Foundation at [email protected] or call +1(858) 779 - 1554.

The investigation by a law firm concerns whether United Online, Inc violated the Federal Securities Laws by issuing false and misleading statements between May 1, 2007 and November 17, 2009.

United Online’s 12 months Total Revenue rose from $533.65million in 2006 to $990.13million in 2009. Its Net Income rose from $41.23million in 2006 to $70.08million in 2009. But during 2008 United Online, Inc. had to report a Net Loss of $94.66million. For the first three quarters in 2010, United Online, Inc. reported a combined nine months Total Revenue of $687/95million with a combined nine months Net Income of $37.34million.Shares of United Online, Inc. (NASDAQ: UNTD) traded during 2006 as low as $10.24 but then increased to $17.21 in June 2007. During 2008 UNTD traded still as high as $12.23 but fell during 2009 to as low as $3.93 per share in March 09.

The investigation by a law firm also concerns whether United Online, Inc. and its CEO Goldston materially inflated United Online’s reported revenue by using Internet scams designed to mislead consumers.

On November 17, 2009, the Senate issued a report entitled “Aggressive Sales Tactics on the Internet and Their Impact on American Consumers” describing misleading sales tactics, and finding that E-Commerce companies knew that these aggressive sales tactics were harming their customers.

According to the Senate report United Online Inc. agreed to let Affinion, Vertrue, and Webloyalty sell club memberships to consumers as they were in the process of buying movie tickets, plane tickets, or other online goods and services. According to the report misleading “Yes” and “Continue” buttons caused consumers to reasonably think they were completing the original transaction, rather than entering into a new, ongoing financial relationship with membership clubs operated by Affinion, Vertrue, or Webloyalty.
In addition, so the report, even more misleading and confusing was that United Online, Affinion, Vertrue, and Webloyalty used a “data pass” process to automatically transfer consumers‘ credit or debit card information from the familiar web seller to the third-party membership club so that consumers did not know that they were entering a new, ongoing financial relationship with an unfamiliar company. After a 30-day ‘‘free trial’’ period, Affinion, Vertrue, or Webloyalty began charging the consumer a monthly fee of $10–$20 until the consumer cancels the membership, so the report.

The report claims that using aggressive sales tactics to enroll consumers in unwanted membership clubs is a billion-dollar business and Affinion, Vertrue, Webloyalty and their e-commerce partners have earned over $1.4 billion in revenue by using aggressive tactics to charge Internet shoppers for club membership programs. According to the report hundreds of well-known websites and online retailers have earned hundreds of millions of dollars employing aggressive online sales tactics, and Classmates.com, owned by United Online, INc since 2004, has made more than $70 million using these controversial practices.

According to an article in PC World magainz with the title :” Just Cancel the @#%$* Account!” PC World magazine field-tested several companies to determine how easy or difficult it was to cancel their service and Classmates.com was one of the companies that received their worst rating. In August 2010, New York Attorney General Andrew Cuomo announced a settlement with six companies, including Classmates, as part of a probe into the discount club industry. Classmates.com was among the retailers that agreed to pay $2.1 million toward refunds and consumer education. Furthermore Classmates.com has agreed to pay up to $9.5 million to its users to settle a lawsuit that accused the social network of sending fraudulent emails that told recipients their old friends from school wished to reconnect (and the recipients would need to buy Classmates.com memberships to receive their old friends' contact information).

The report by the Senate said that the Affinion, Vertrue, and Webloyalty have knowingly charged millions of consumers for services the consumers do not use and are unaware they have purchased and their customer service centers are almost entirely dedicated to handling the large volume of calls from angry and confused consumers requesting cancellations.

United Online’s common stock dropped from a closing price of $8.39 on November 17 to a closing price of $7.03 on November 19.

During the days before the announcement of the Senate report certain officers at United Online sold substantial amounts of UNTD shares. Chairman, President & CEO of United Online, Inc Mark Goldston sold over 750,000 UNDT shares between Nov. 4 and Nov 15. Executive Vice President, Chief Strategy Officer, Interim President of Classmates Media Corporation Frederic Randall sold over 120,000 shares between Nov. 9 and Nov 15. Executive Vice President - Sales and Chief Sales Officer Jeremy Helfan, sold over 96,000 shares of United between Nov. 15 and Nov 18. President - Communications Segment Robert Taragan sold over 53,000 shares between Nov.11 and Nov.15. Executive Vice President, Chief Personnel Officer Paul Jordan sold over 49,000 shares between Nov. 15 and Nov. 10. On November 15, 2010, Executive Vice President, General Counsel, Secretary Charles Ammann sold roughly 29,000 shares and President of FTD Group Inc Robert Apatoff sold over 41,000 shares.

Those who purchased United Online, Inc. (Public, NASDAQ:UNTD) stock, including those who purchased UNTD shares between May 1, 2007 and November 17, 2009, and/or if you have any information relating the investigation including those who are former employees and/or whistleblowers, have certain options and should contact the Shareholders Foundation.

It appears that ShareholdersFoundation.com is run by a law firm. They're investigating whether UNTD knew the WebLoyalty-type programs were scams and then used the income to misrepresent the financial health of the company to shareholders.

At the time FTD and Classmates.com were raking in huge profits by flipping consumer credit card numbers over to the post-transaction marketing companies, I don't believe the programs were expressly illegal (they are now). But FTD and Classmates both paid fines to the state of NY for the rip-offs and Classmates coughed up another $9.5 million to settle a class action lawsuit for deceptive marketing.

The allegations about the UNTD executive office team unloading large amounts of shares just days before the Senate report was released look like they'll have legs. Insiders would have know about the investigations - and they also would know the stock prices were likely to fall once word hit the street.

The Groupon 'discount' fiasco this week further reinforces a wholly corrupt corporate culture.

All I can say to FTD florists is to look out for more fees from FTD, because consumers won't pay higher prices and you're the likely go-to source for cash.

Another one to watch.

 

[theRKF]

I loved the comment from one Facebook user when we posted this news on the FlowerChat FB page:

This might cause me to start liking lawyers

When everyone was predicting last year that one of the big three could fail soon I honestly didn't expect it could be FTD on the brink. The hits just keep on coming.

 

[ROBSWF]

Thanks for posting this!

This is perfect example of business being conducted without a conscious. That never lasts forever, and things seem to be crumbling down around them.

Looking at FTD's Facebook page with the unbelievable amount of complaints just amazes me. In the old days companies were able to camouflage unhappy customers by sweeping them under the corporate carpet. Those days are long gone!

This is a management style that apparently uniform across the board to take advantage of their customers. EVERYONE - investors, consumers and florists alike. The pattern can't be ignored.

We're witnessing the destruction of a once highly regarded national brand.


On another board Tom Moeller posted the following comment; (Tom is the Executive VP of FTD, in charge of the Florist Division)
*His comments were in relation to florist complaints about the direction FTD was heading*

Quote from: Tom Moeller on February 01, 2011, 07:05:40 PM

I find this discussion very interesting and candidly, not the most productive way to spend our energies.

To me, all of this is in response to very dynamic, industry change, driven largely by the consumer and on line purchasing of this category. Though change management isn't easy, those that don't adapt, will struggle and risk relevancy.

It too easy the play the blame game and in this case, point the figure at FTD or for that matter other wire services. I do think it's important to clarify that drop ship is a consumer solution for lower price points that FTD and others offer. Even TF has indirectly worked with Pro in the past on this. It's part of the business that can't be ignored and florists have chosen not to compete for.

FTD isn't a coop or an association anymore. It's company that sells and markets products and services to consumers and retailers. They are a part of a public company that serves consumers, customers and shareholders. They also have recommitted themselves to growing and innovating the category. No different than any good company, they reward their top customers and look to help others by yes, selling products and services for mutual gain.

I often wonder what this industry could be if all parts of the supply chain adapted to the ever changing consumer verse fighting it, blaming and living in the past.



They think we should adapt to their way of doing business with consumers.

He says we risk relevancy !


Rob

 

[BOSS]

When everyone was predicting last year that one of the big three could fail soon I honestly didn't expect it could be FTD on the brink. The hits just keep on coming.

The bigger they are, the harder they fall....eventually....

On the surface, it does not appear that this one will go away with a simple fine and a kick-back to consumers...

 

[Mikey the Flower Guy]

When MIKEY stops caring about FTD, and it's obnoxious behaviours, it's dead anyway.....I've already buried MY little part of it!

 

[Eric S]

What’s disturbing to me is since I have entered the field of owning a business it does seem to me that there are more crooks out there conducting business that just love to prey on other business and consumers.

We assume that everyone is always on the up and up and hear consumers complain about their local mechanics and florist but the funny thing is they don't have a clue about the scams being run with their banks, credit cards, Amazon and Apple. The list goes on and on.

There are too many companies out there just trying to get your piece of the pie and you have to experience the scam to learn from it and hope that your business survives whatever scam you got suckered into.

 

[anytimeflowers]

As quoted by Tom Moeller via Rob, emphasis mine.

It too easy the play the blame game and in this case, point the figure at FTD or for that matter other wire services. I do think it's important to clarify that drop ship is a consumer solution for lower price points that FTD and others offer. Even TF has indirectly worked with Pro in the past on this. It's part of the business that can't be ignored and florists have chosen not to compete for.

I find that particularly troublesome. If I were boxing up flowers and shipping through a shipper that does not require a signature for home delivery, I would no longer call myself a florist.

I am all about remaining relevant to my customers, making on-going and continuous efforts to stay on top of what my consumers want. They do NOT want flowers in a box type service.

In my opinion, the two business models do not compare and that is what is bringing down the biggies as they try to hang onto the false numbers that they became accustomed to in the last two decades. Screwing my customers has never been an option.

 

[Mikey the Flower Guy]

As quoted by Tom Moeller via Rob, emphasis mine.



I find that particularly troublesome. If I were boxing up flowers and shipping through a shipper that does not require a signature for home delivery, I would no longer call myself a florist.

I am all about remaining relevant to my customers, making on-going and continuous efforts to stay on top of what my consumers want. They do NOT want flowers in a box type service.

In my opinion, the two business models do not compare and that is what is bringing down the biggies as they try to hang onto the false numbers that they became accustomed to in the last two decades. Screwing my customers has never been an option.

Thank you!!......credibility AND integrity go hand and hand...when you build a "model".....you either have it, or you don't!!

 

[lori042499]

To me, all of this is in response to very dynamic, industry change, driven largely by the consumer and on line purchasing of this category. Though change management isn't easy, those that don't adapt, will struggle and risk relevancy.



Read more: FTD Parent Co UNTD being Investigated for Possible SEC Violations
Where professional florists grow FC Professional Florist Community​

I just wonder if he realizes that if florists do adapt to the changes, that that leaves his company out in the cold...

He 100% correct in the quote above, things are changing and florist do need to adapt or risk relevancy and struggle...but his company and companies like it are the reason florists are risking relevancy and struggling...I know that I have had a hard time giving up on the WS, I was afraid and still am, it is what I know...but I also know that my business will not survive by doing things that same way it always has...I have seen huge growth in my business just not making the same old same old, I have to trust in that...I also have to trust in the fact that they will buy and pay more for things that are unique..I will never know if I don't try it..and so many florists are teetering on this revelation...
If the florists that are teetering decide to listen to FTD and try to compete with the dropship shop, they will fail and FTD will be out of luck, if they decide to take the advice and get relevant ftd is out of luck, either way writing is on the wall, they are out of luck..

 

[Mikey the Flower Guy]

To me, all of this is in response to very dynamic, industry change, driven largely by the consumer and on line purchasing of this category. Though change management isn't easy, those that don't adapt, will struggle and risk relevancy.



Read more: FTD Parent Co UNTD being Investigated for Possible SEC Violations
Where professional florists grow FC Professional Florist Community​

I just wonder if he realizes that if florists do adapt to the changes, that that leaves his company out in the cold...

He 100% correct in the quote above, things are changing and florist do need to adapt or risk relevancy and struggle...but his company and companies like it are the reason florists are risking relevancy and struggling...I know that I have had a hard time giving up on the WS, I was afraid and still am, it is what I know...but I also know that my business will not survive by doing things that same way it always has...I have seen huge growth in my business just not making the same old same old, I have to trust in that...I also have to trust in the fact that they will buy and pay more for things that are unique..I will never know if I don't try it..and so many florists are teetering on this revelation...
If the florists that are teetering decide to listen to FTD and try to compete with the dropship shop, they will fail and FTD will be out of luck, if they decide to take the advice and get relevant ftd is out of luck, either way writing is on the wall, they are out of luck..

Lori...FTD is gonna drag it's member florists into an "abyss" that will be hard to escape...You and I have similar "umbilical" attachments to wire services, and as with ALL umbilical cords, they must be cut, for you to grow and be independent.
The wire service of flavour, has this dynamic in reverse...the "umbilical" is meant to SUPPLY you with resources, NOT suck them outta you....
C'mon down........my dim light is now bright as I've ever seen it.....

 

[blenko]

Tom Moeller is an a**hole

To me, all of this is in response to very dynamic, industry change, driven largely by the consumer and on line purchasing of this category. Though change management isn't easy, those that don't adapt, will struggle and risk relevancy.



Read more: FTD Parent Co UNTD being Investigated for Possible SEC Violations
Where professional florists grow FC Professional Florist Community​

I just wonder if he realizes that if florists do adapt to the changes, that that leaves his company out in the cold...

He 100% correct in the quote above, things are changing and florist do need to adapt or risk relevancy and struggle...but his company and companies like it are the reason florists are risking relevancy and struggling...I know that I have had a hard time giving up on the WS, I was afraid and still am, it is what I know...but I also know that my business will not survive by doing things that same way it always has...I have seen huge growth in my business just not making the same old same old, I have to trust in that...I also have to trust in the fact that they will buy and pay more for things that are unique..I will never know if I don't try it..and so many florists are teetering on this revelation...
If the florists that are teetering decide to listen to FTD and try to compete with the dropship shop, they will fail and FTD will be out of luck, if they decide to take the advice and get relevant ftd is out of luck, either way writing is on the wall, they are out of luck..

Tom Moeller is an a**hole. Why any florist would pay to be in business with the FTD corporation is beyond me. We should all remember Mr. Moller's statement that FTD is no longer a co-op. It's true, FTD is nothing more than a competitor that lacks ethics and a middle man that always has his hand in florist's pockets. Mr. Moeller is yet another executive that gets bonus money when he comes up with new and different ways to screw over FTD 'members'. His arrogance in this statement is stunning.