Digital River: Missing payments and evasive communication
Digital River acts as a payment service provider between stores and customers. Merchants are complaining that no payments have been received since around July.
(Image: photoschmidt/Shutterstock.com)
Customers of the e-commerce service provider Digital River are looking down the tubes: payments have apparently not been made since July. The situation is unclear and the US company has not yet provided any clarification. Numerous companies in this country are also affected.
Digital River is a service provider for e-commerce providers. The company operates online stores for major brands such as Nvidia, but also offers itself as a payment service provider for small companies and independent software developers. Customers can offer their goods and services, Digital River processes the payment via the "MyCommerce" platform and forwards the money collected minus a commission. At least that's how it worked until recently. However, complaints from customers, which heise online has also received, are now increasing.
Extension of the payment deadline
Among other things, customers report that Digital River has recently extended the deadline for payment to the seller from 15 to 60 days. This means that payments from July 2024 are now due by October at the latest. Affected customers are exchanging information in various forums and in some cases estimate their arrears at five- and six-figure amounts. The company is also said to have attempted to impose amended terms and conditions on merchants that include new fees.
The problem is not only occurring in English-speaking countries; German companies are also expressing their frustration in forums. In this country, the US company previously operated through a German subsidiary with an address in Frankfurt am Main, which in turn belongs to a holding company in the UK. According to the commercial register entry of September 6, a new managing director for the German GmbH was appointed by shareholder resolution on August 14, 2024, who is apparently an American lawyer residing in Minneapolis, Minnesota. The GmbH is no longer listed in the legal notice of the German website, which refers to the US company headquarters in Minnesota.
According to the last published annual financial statements, the German subsidiary transferred around EUR 5.8 million to the British holding company in 2022. The UK subsidiary, on the other hand, has recently been on shaky ground. According to the 2022 annual financial statements of the UK subsidiary Digital River UK, previous losses were to be countered with cost reductions. Auditors emphasize that the continued existence of the company is heavily dependent on payments from the US parent company. At the same time, the UK subsidiary reported a comparatively small profit of 155,298 pounds for 2022.
Affected parties organize class action lawsuit
Nothing else is known about the background, but speculation is all the more intense. Apparently, Digital River was recently sold and a new CEO took over the business. There is now speculation that the new owner could cannibalize and liquidate the company. There is talk of redundancies at the US parent company. According to a report by The Register, the company is having a law firm reject the claims of the dealers. In English-language forums, those affected by the payment default are also trying to organize a class action lawsuit.
There are some current posts about Digital River on an internet portal for rumors about redundancies. Users can post there anonymously and the truth of the information cannot be easily verified. According to these posts, however, there have been further redundancies at Digital River, and frustration over incompetent management staff is spreading. Others speculate that a new owner is planning to cease business operations in November.
The company and its European subsidiaries have not yet responded to inquiries, and an inquiry from heise online has so far gone unanswered.
(dmk)
