Internet firm faces customer revolt

RUSSELL EMMERSON | From: The Advertiser | December 02, 2009 10:15AM

AN INTERNET marketing firm offering financial independence for clients is facing a customer revolt which is threatening its cash flow.

Geekdom, a subsidiary of the listed Photon Group, is facing the prospect of national legal action from former customers seeking refunds of their $18,000 payments.

The company is also battling a $20,000 pay dispute with a former employee.

"I know of clients who haven't been paid, I know of contractors who haven't been paid, I know of a sizeable number of suppliers who haven't been paid," an industry source said.

"They booked a lot of sales that were on payment plans, and if customers get refunds, payments don't get made."

Geekdom teaches its customers how to trade online advertising traffic, sell affiliated products and trade domain names using its proprietary software, Internet in a Box. But a dramatic drop in online revenues sparked a rush of refund requests.

A company source said its client base had dropped from 230 to 160 active clients since September. Another 170 students were seeking a refund.

Geekdom chief executive Troy Rushton said these numbers were not "totally accurate, but they don't feel wildly out". He said payments had been delayed because customers had not supplied ABNs, but the delays were not "onerously long".

"It is not a solvency issue, it is about the sheer volume of activity we are undertaking to meet this demand for refunds," he said.

"We have got a flurry of requests for refunds, so we are working our way through that. But we have support from Photon as our shareholder, we have substantial debtors, but by no means are we insolvent."

Photon Group chairman Tim Hughes has announced a revised bid for listed internet marketing company Dark Blue Sea and has reportedly held discussions with Lachlan Murdoch and his private investment company Illyria about taking a stake in Photon.

He has refused to confirm speculation that the company intends to spin off its internet and e-commerce division, anchored by Geekdom, into a new $120 million entity.

Photon shares closed unchanged at $1.55.

Source: http://www.adelaidenow.com.au/business/sa-business-journal/internet-firm-faces-customer-revolt/story-e6fredel-1225806061410