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Tell HN: DigitalRiver/MyCommerce stopped paying vendors since July

155 points by grujicd 2y ago

We're a small family company and the $20k MyCommerce owes us is a big deal. For those who don't know MyCommerce is a platform for selling software online. They're merchant of record, they handle taxes, generate license keys, etc so they're a bit higher level than Stripe or PayPal. We're with them since 2005. Things started going south in August. July payment was due on August 15 but never came. Few days afterwards they sent and email that they're changing contract terms and that payments will now be sent 60 days instead of 15 days after the month. Sadly, I didn't switch to another payment processor immediately that day - accountants were on holiday, we were investigating our options, and we were generally happy for 20 years with them. We switched only in September, where they worsened contract terms even more, introducing monthly fee, hourly fee for support, increased payment thresholds, etc. By the time we switched, MyCommerce already sat on entire revenue from July, August, and half of September. Their support is not helpful. This is not only about us, it's about myriad other vendors, mostly small ones. Unfortunately, we didn't have online space to share our findings and experiences. I only found today that it was discussed on kvraudio forum, and a bit on LinkedIn. There are many small vendors who are now in a hole for tens of thousands of dollars/euros. It looks pretty much that MyCommerce / DigitarRiver Gmbh are in financial trouble. There are news of layoffs and new management. It's questionable whether we'll see any of our money and when. But the troubling part is MyCommerce still operates and takes orders. If there are vendors who still only know about what MyCommerce officially told them and wait for delayed payments - please reconsider your position. https://www.kvraudio.com/forum/viewtopic.php?t=612462 https://www.kvraudio.com/forum/viewtopic.php?t=612462 https://www.kvraudio.com/forum/viewtopic.php?t=614929&start=30 https://www.kvraudio.com/forum/viewtopic.php?t=614929&start=... https://www.linkedin.com/posts/lorant-barla_mycommerce-digitalriver-contracts-activity-7244193845607878657-iS4S/ https://www.linkedin.com/posts/lorant-barla_mycommerce-digit...

Syncsro 2y ago
Same problem here,last payment was for May revenue. And other companies have Same problem https://www.linkedin.com/posts/maja-te%C5%A1i%C4%87-8435509b_mycommerce-digitalriver-digitalriverpaymentissue-activity-7248370896292204544-jtXx?utm_source=share&utm_medium=member_android https://www.linkedin.com/posts/maja-te%C5%A1i%C4%87-8435509b...
jonjbar 2y ago
+1 Exactly what we are experiencing ourselves but we made the mistake to wait till the beginning of October to switch: even if we didn't like the payment term changes, we had no reasons to suspect that we wouldn't receive any moneys at the end of September / beginning of October. They now owe us tens of thousands of dollars. And with the massive exodus, I do not have high hopes to get any of that money at all. We've been with this company since 2001 (previously called Element5 / Share-It!) without any problems. I can't understand or imagine what could have made them believe like this: as of today, they are still processing payments from end users! Hopefully, raising awareness on this issue will give us at least answers...
- grujicd 2y ago
  It's speculated on that audio forum that they took a big hit when Kaspersky sales were banned in the USA, as this was their perhaps biggest customer. Who would thought that such thing would affect many other vendors not related in any way to Kaspersky? Still, their cut is around 5-10%, depending on how much they dip on the exchange rate. That means they hoarded 10-20x of their usual profits for July, August and September from all the other vendors. I sure hope that they didn't spent all that or moved it to a parent company. But the fact that we're not hearing any official statements suggests otherwise.
  - kijin 2y ago
    There's no money to hoard. It doesn't really work like that. Companies like this are usually run as a barely sustainable ponzi scheme. Any money they might have had is long gone. They're paying your September revenue with money from their October sales, and they plan to pay your October revenue with money from their November sales. Then suddenly their sales take a big hit, perhaps because a big merchant left, or perhaps because of a general economic downturn. They still need to pay out their other merchants' October revenue, but their November sales are not enough to cover it. What happens is that they announce that from now on, payment terms will be net 60 instead of 15 or 30. This is the first big red flag. The plan is to wait for December sales. Maybe that will solve the problem in the short term. Maybe it won't, and if it doesn't, by January everyone is in deep shit.
newaccount74 2y ago
I'm also affected. I'm considering suing them, but I am unsure if that makes sense. The German entity probably has no assets. Lawsuit would probably cost thousands of euros in legal fees, take a year, and it is unlikely there are any assets left to recover by the time the lawsuit is over.
- bigfatkitten 2y ago
  Sounds like they're trading insolvent, in which case you're not going to get any money out of them if you sue them.
grujicd 2y ago
One person reported that "Contract library" is no longer visible for him in his MyCommerce account, and supported it with a screenshot. I suggest that we all download all documents that could be useful from their portal - contracts and sales/order reports for problematic months. Edit: he clarified later that he's already in the process of cancellation and that's probably the reason he doesn't see contracts any more
ThePhysicist 2y ago
They're also (or were, a couple of years ago) handling all Lenovo sales in Germany, so if it's true that would be a big deal.
onlinefields 2y ago
[flagged]
meshr 2y ago
what we can do: 1 Ask customers if they agree to get refund&repay you to different merchant. Subtract 180 days from now for paypal orders (there is no deadline for CC? i could refund 1 year 2 months while testing) and start refunding orders after this date. We are losing ability to do this everyday, but we increase our refund rate by doing this so no hurry 2 Ask users w/ lawyers to fill class action lawsuit or at least to share their contacts/lawsuit+claim interest rate for unpaid amount https://www.kvraudio.com/forum/viewtopic.php?p=8979590#p8979590 https://www.kvraudio.com/forum/viewtopic.php?p=8979590#p8979... 3 subrogation: sell our accounts to lawyers
- ajb 2y ago
  3 sounds like the best option - especially if many of the merchants agree to sell to the same lawyer, maybe it will end up owning the company and reform it
GDF6F 2y ago
These b*stards owe my company $90,000 for the July/August payment. A class action lawsuit seems to be the only viable option. While $90,000 might not be a large sum for a lawyer to take on individually, if it's multiplied by 100 or 1000 cases, it becomes much more significant. I've conducted a thorough search but haven't yet identified a law firm we should all reach out to. Since we're not based in the US, our current law firm isn't a strong enough option. According to this article... https://www.theregister.com/2024/10/15/digital_river_runs_dry_hasnt https://www.theregister.com/2024/10/15/digital_river_runs_dr... DR's lawyers are: https://mintzandgold.com/ https://mintzandgold.com/
- hiddencost 2y ago
  Keep in mind the money is probably mostly already gone. And a class action suit will take a large chunk of the remainder. So plan to get none of it back.
anthonyeden 2y ago
Digital River emailed out of the blue a few months back saying we need to do new Know-Your-Customer paperwork. The forms are painful and I've had to resubmit a couple of times for minor mistakes - unsure if they'll ever actually accept it, and it seems to take a week or more for any response to a ticket. Their new platform terms come into effect today, and they have absolutely buried the scale of their new monthly fee (US$100/month for me - unsure if it varies per customer). None of the emails mention the fee amounts. Customer support couldn't tell me the fee amounts. I checked the portal again today and the new contract finally has the new fees in it. I setup a new merchant of record a few weeks ago, but that doesn't help the fact they're sitting on a few grand of my sales. My balance is above their new payout threshold (US$2500), but it wouldn't surprise me if they sit on the money and let the monthly fees eat into it until it's back below the threshold. Thought I was doing the right thing by using a merchant of record to handle my international B2B sales since 2016. Apparently not. Fun times.
- troymc 2y ago
  Using a merchant of record is a good idea in 2024, now that every little jurisdiction wants you to collect their sales tax for them, and to remit that sales tax to them. (That wasn't always true.) Stripe recently acquired Lemon Squeezy, another merchant of record, so maybe look into that. (Stripe Tax will help you collect the right amount of sales tax, but that's only half the problem. You still have to remit it to all the relevant jurisdictions.) Other options are Paddle and FastSpring.
  - morpheuskafka 2y ago
    I saw a thread here a couple days ago about new product liability rules for software in the EU that would apply to importers/distributors where the manufacturer is overseas. I wonder if anyone will still be willing to provide this "merchant of record" service in the EU once that takes effect.
    - bryanrasmussen 2y ago
      at the worst wouldn't it just mean that a lot of merchants of record will say we don't handle software, and maybe one or two big ones scoop up all the software business with some fancy insurance deals? I believe this is what the theories of capitalism say would happen.
fenesiistvan 2y ago
I am also affected. Can somebody suggest a good alternative?
- troymc 2y ago
  Maybe Lemon Squeezy? Stripe recently acquired them, so they're probably not going insolvent any time soon.
- paypro_global 2y ago
  [dead]
Uzair12345 2y ago
0x00000000219ab540356cbb839cbe05303d7705fa
duskwuff 2y ago
Related: https://news.ycombinator.com/item?id=41856330 https://news.ycombinator.com/item?id=41856330 Some more horror stories from merchants in the comments there.
- dang 2y ago
  Thanks—macroexpanded: Digital River runs dry, hasn't paid developers for sales since July - https://news.ycombinator.com/item?id=41856330 https://news.ycombinator.com/item?id=41856330 - Oct 2024 (17 comments)
  - grujicd 2y ago
    To add few more resources that are not immediately visible: Layoff reports: https://www.thelayoff.com/digital-river https://www.thelayoff.com/digital-river Public UK gov records filled by Digital River UK, including 51 page contract between all Digital River subsidiaries in all countries and Cerberus Business Finance Agency on 8 August: https://find-and-update.company-information.service.gov.uk/company/05788465/filing-history https://find-and-update.company-information.service.gov.uk/c...
deleted 2y ago
[deleted]
xyst 2y ago
Crazy to see the downfall of a company in real time. Management is pulling some Ponzi scheme shit. Wonder if this company took on a shit ton of debt or PE and now the bill is due.
yuliaa211 2y ago
[flagged]
projectileboy 2y ago
As soon as they got bought out by a private equity firm (10 years back) it marked the beginning of a long, slow end.
csomar 2y ago
Write off your loss and move on. Based on previous instances of this happening, you have more chance to recover your money from a crypto exchange gone bust than a traditional credit card processor. I, also, would not consider this a major hit. You had been sailing with them for 20 years. I've seen many more things break in a shorter time frame. Such is life.
- grujicd 2y ago
  You are of course right. However, there are two aspects of "write off your loss". Mental one, and a legal one. Unfortunately in our jurisdiction (Serbia), as soon as your company issues an invoice, it's counted as realized income for tax purposes. I've just opened this can of worms, but apparently you can delay that on-paper income if payment is late, but in the end you might need to sue the other party and get court documents to prove they can't pay.
  - csomar 2y ago
    Back then I only issued an invoice when the payment was made. My accountant tried to explain to me otherwise but it never made sense to me. Not getting paid and also having to pay taxes on that?
  - bruce511 2y ago
    I obviously can't speak to Serbian tax law, but this rule (invoice =income) is applied universally. In my country if the invoice is not paid then that becomes a "bad debt", which in accounting terms is an expense (which in effect is then a tax credit.) There is sometimes a tax approach for very small companies where tax is calculated purely from invoice, and not from net-income, but there are typically benefits to that which outweigh the bad debts.
  - morpheuskafka 2y ago
    I think you need to research the accounting rules for "bad debt" in your country. As for being taxed when the invoice was issued, that would be the same as in US and other countries too for all medium-large companies (although some small businesses would use "cash" accounting). I would be surprised if it was actually required to sue the other party--retailers, banks, etc. everywhere have millions in bad debt every year that is not sued because the amount is too small or there is no reason to believe the other side can pay the ordered amount. In fact, if you were a publicly traded company, you could get in trouble for not writing off bad debt because it makes the company look more successful than it really is. So there should definitely be a clear procedure for it.
formerly_proven 2y ago
It's interesting to see how unilateral contract and term changes, assumed consent etc. pioneered by internet companies in "B2C" relations is now becoming a more widespread thing for B2B relations as well.
deleted 2y ago
[deleted]
saasgtmguy 2y ago
Hope you've handled this. If not, there's a new alternative right now that seems to be solving this really well. They're early access though.
byteplant 2y ago
We at Byteplant have been using DR/MyCommerce for 20+ years. Like all DR clients, we have not been paid since July. We are working with a law firm in Cologne, Germany to take legal action against DR/MyCommerce and their executive team (Strafanzeige, Insolvenzantrag, dinglicher Arrest etc.). To get the law enforcement authorities here in Germany moving, we now need your help to collect as much evidence as possible - so we need everybody here to join in and send your company and contact details along with any unpaid sales reports you can provide to dr@byteplant.com. Everything you send will of course be treated confidentially and only be used in the context of the legal proceedings. Remember: If we all stand together now and act fast to collect documentation for as many cases as possible, the better our chances are to get the authorities to do their work and hopefully help us to recover the money for all of us.

155 points by grujicd 2y ago

Syncsro 2y ago

Same problem here,last payment was for May revenue. And other companies have Same problem https://www.linkedin.com/posts/maja-te%C5%A1i%C4%87-8435509b_mycommerce-digitalriver-digitalriverpaymentissue-activity-7248370896292204544-jtXx?utm_source=share&utm_medium=member_android https://www.linkedin.com/posts/maja-te%C5%A1i%C4%87-8435509b...

jonjbar 2y ago

+1 Exactly what we are experiencing ourselves but we made the mistake to wait till the beginning of October to switch: even if we didn't like the payment term changes, we had no reasons to suspect that we wouldn't receive any moneys at the end of September / beginning of October. They now owe us tens of thousands of dollars. And with the massive exodus, I do not have high hopes to get any of that money at all. We've been with this company since 2001 (previously called Element5 / Share-It!) without any problems. I can't understand or imagine what could have made them believe like this: as of today, they are still processing payments from end users! Hopefully, raising awareness on this issue will give us at least answers...

grujicd 2y ago
It's speculated on that audio forum that they took a big hit when Kaspersky sales were banned in the USA, as this was their perhaps biggest customer. Who would thought that such thing would affect many other vendors not related in any way to Kaspersky? Still, their cut is around 5-10%, depending on how much they dip on the exchange rate. That means they hoarded 10-20x of their usual profits for July, August and September from all the other vendors. I sure hope that they didn't spent all that or moved it to a parent company. But the fact that we're not hearing any official statements suggests otherwise.
- kijin 2y ago
  There's no money to hoard. It doesn't really work like that. Companies like this are usually run as a barely sustainable ponzi scheme. Any money they might have had is long gone. They're paying your September revenue with money from their October sales, and they plan to pay your October revenue with money from their November sales. Then suddenly their sales take a big hit, perhaps because a big merchant left, or perhaps because of a general economic downturn. They still need to pay out their other merchants' October revenue, but their November sales are not enough to cover it. What happens is that they announce that from now on, payment terms will be net 60 instead of 15 or 30. This is the first big red flag. The plan is to wait for December sales. Maybe that will solve the problem in the short term. Maybe it won't, and if it doesn't, by January everyone is in deep shit.

newaccount74 2y ago

I'm also affected. I'm considering suing them, but I am unsure if that makes sense. The German entity probably has no assets. Lawsuit would probably cost thousands of euros in legal fees, take a year, and it is unlikely there are any assets left to recover by the time the lawsuit is over.

bigfatkitten 2y ago
Sounds like they're trading insolvent, in which case you're not going to get any money out of them if you sue them.

grujicd 2y ago

One person reported that "Contract library" is no longer visible for him in his MyCommerce account, and supported it with a screenshot. I suggest that we all download all documents that could be useful from their portal - contracts and sales/order reports for problematic months. Edit: he clarified later that he's already in the process of cancellation and that's probably the reason he doesn't see contracts any more

ThePhysicist 2y ago

They're also (or were, a couple of years ago) handling all Lenovo sales in Germany, so if it's true that would be a big deal.

onlinefields 2y ago

[flagged]

meshr 2y ago

what we can do: 1 Ask customers if they agree to get refund&repay you to different merchant. Subtract 180 days from now for paypal orders (there is no deadline for CC? i could refund 1 year 2 months while testing) and start refunding orders after this date. We are losing ability to do this everyday, but we increase our refund rate by doing this so no hurry 2 Ask users w/ lawyers to fill class action lawsuit or at least to share their contacts/lawsuit+claim interest rate for unpaid amount https://www.kvraudio.com/forum/viewtopic.php?p=8979590#p8979590 https://www.kvraudio.com/forum/viewtopic.php?p=8979590#p8979... 3 subrogation: sell our accounts to lawyers

ajb 2y ago
3 sounds like the best option - especially if many of the merchants agree to sell to the same lawyer, maybe it will end up owning the company and reform it

GDF6F 2y ago

These b*stards owe my company $90,000 for the July/August payment. A class action lawsuit seems to be the only viable option. While $90,000 might not be a large sum for a lawyer to take on individually, if it's multiplied by 100 or 1000 cases, it becomes much more significant. I've conducted a thorough search but haven't yet identified a law firm we should all reach out to. Since we're not based in the US, our current law firm isn't a strong enough option. According to this article... https://www.theregister.com/2024/10/15/digital_river_runs_dry_hasnt https://www.theregister.com/2024/10/15/digital_river_runs_dr... DR's lawyers are: https://mintzandgold.com/ https://mintzandgold.com/

hiddencost 2y ago
Keep in mind the money is probably mostly already gone. And a class action suit will take a large chunk of the remainder. So plan to get none of it back.

anthonyeden 2y ago

Digital River emailed out of the blue a few months back saying we need to do new Know-Your-Customer paperwork. The forms are painful and I've had to resubmit a couple of times for minor mistakes - unsure if they'll ever actually accept it, and it seems to take a week or more for any response to a ticket. Their new platform terms come into effect today, and they have absolutely buried the scale of their new monthly fee (US$100/month for me - unsure if it varies per customer). None of the emails mention the fee amounts. Customer support couldn't tell me the fee amounts. I checked the portal again today and the new contract finally has the new fees in it. I setup a new merchant of record a few weeks ago, but that doesn't help the fact they're sitting on a few grand of my sales. My balance is above their new payout threshold (US$2500), but it wouldn't surprise me if they sit on the money and let the monthly fees eat into it until it's back below the threshold. Thought I was doing the right thing by using a merchant of record to handle my international B2B sales since 2016. Apparently not. Fun times.

troymc 2y ago
Using a merchant of record is a good idea in 2024, now that every little jurisdiction wants you to collect their sales tax for them, and to remit that sales tax to them. (That wasn't always true.) Stripe recently acquired Lemon Squeezy, another merchant of record, so maybe look into that. (Stripe Tax will help you collect the right amount of sales tax, but that's only half the problem. You still have to remit it to all the relevant jurisdictions.) Other options are Paddle and FastSpring.
- morpheuskafka 2y ago
  I saw a thread here a couple days ago about new product liability rules for software in the EU that would apply to importers/distributors where the manufacturer is overseas. I wonder if anyone will still be willing to provide this "merchant of record" service in the EU once that takes effect.
  - bryanrasmussen 2y ago
    at the worst wouldn't it just mean that a lot of merchants of record will say we don't handle software, and maybe one or two big ones scoop up all the software business with some fancy insurance deals? I believe this is what the theories of capitalism say would happen.

fenesiistvan 2y ago

I am also affected. Can somebody suggest a good alternative?

troymc 2y ago
Maybe Lemon Squeezy? Stripe recently acquired them, so they're probably not going insolvent any time soon.
paypro_global 2y ago
[dead]

Uzair12345 2y ago

0x00000000219ab540356cbb839cbe05303d7705fa

duskwuff 2y ago

Related: https://news.ycombinator.com/item?id=41856330 https://news.ycombinator.com/item?id=41856330 Some more horror stories from merchants in the comments there.

dang 2y ago
Thanks—macroexpanded: Digital River runs dry, hasn't paid developers for sales since July - https://news.ycombinator.com/item?id=41856330 https://news.ycombinator.com/item?id=41856330 - Oct 2024 (17 comments)
- grujicd 2y ago
  To add few more resources that are not immediately visible: Layoff reports: https://www.thelayoff.com/digital-river https://www.thelayoff.com/digital-river Public UK gov records filled by Digital River UK, including 51 page contract between all Digital River subsidiaries in all countries and Cerberus Business Finance Agency on 8 August: https://find-and-update.company-information.service.gov.uk/company/05788465/filing-history https://find-and-update.company-information.service.gov.uk/c...

deleted 2y ago

[deleted]

xyst 2y ago

Crazy to see the downfall of a company in real time. Management is pulling some Ponzi scheme shit. Wonder if this company took on a shit ton of debt or PE and now the bill is due.

yuliaa211 2y ago

[flagged]

projectileboy 2y ago

As soon as they got bought out by a private equity firm (10 years back) it marked the beginning of a long, slow end.

csomar 2y ago

Write off your loss and move on. Based on previous instances of this happening, you have more chance to recover your money from a crypto exchange gone bust than a traditional credit card processor. I, also, would not consider this a major hit. You had been sailing with them for 20 years. I've seen many more things break in a shorter time frame. Such is life.

grujicd 2y ago
You are of course right. However, there are two aspects of "write off your loss". Mental one, and a legal one. Unfortunately in our jurisdiction (Serbia), as soon as your company issues an invoice, it's counted as realized income for tax purposes. I've just opened this can of worms, but apparently you can delay that on-paper income if payment is late, but in the end you might need to sue the other party and get court documents to prove they can't pay.
- csomar 2y ago
  Back then I only issued an invoice when the payment was made. My accountant tried to explain to me otherwise but it never made sense to me. Not getting paid and also having to pay taxes on that?
- bruce511 2y ago
  I obviously can't speak to Serbian tax law, but this rule (invoice =income) is applied universally. In my country if the invoice is not paid then that becomes a "bad debt", which in accounting terms is an expense (which in effect is then a tax credit.) There is sometimes a tax approach for very small companies where tax is calculated purely from invoice, and not from net-income, but there are typically benefits to that which outweigh the bad debts.
- morpheuskafka 2y ago
  I think you need to research the accounting rules for "bad debt" in your country. As for being taxed when the invoice was issued, that would be the same as in US and other countries too for all medium-large companies (although some small businesses would use "cash" accounting). I would be surprised if it was actually required to sue the other party--retailers, banks, etc. everywhere have millions in bad debt every year that is not sued because the amount is too small or there is no reason to believe the other side can pay the ordered amount. In fact, if you were a publicly traded company, you could get in trouble for not writing off bad debt because it makes the company look more successful than it really is. So there should definitely be a clear procedure for it.

formerly_proven 2y ago

It's interesting to see how unilateral contract and term changes, assumed consent etc. pioneered by internet companies in "B2C" relations is now becoming a more widespread thing for B2B relations as well.

deleted 2y ago

[deleted]

saasgtmguy 2y ago

Hope you've handled this. If not, there's a new alternative right now that seems to be solving this really well. They're early access though.

byteplant 2y ago

We at Byteplant have been using DR/MyCommerce for 20+ years. Like all DR clients, we have not been paid since July. We are working with a law firm in Cologne, Germany to take legal action against DR/MyCommerce and their executive team (Strafanzeige, Insolvenzantrag, dinglicher Arrest etc.). To get the law enforcement authorities here in Germany moving, we now need your help to collect as much evidence as possible - so we need everybody here to join in and send your company and contact details along with any unpaid sales reports you can provide to dr@byteplant.com. Everything you send will of course be treated confidentially and only be used in the context of the legal proceedings. Remember: If we all stand together now and act fast to collect documentation for as many cases as possible, the better our chances are to get the authorities to do their work and hopefully help us to recover the money for all of us.