Muskegon Chamber leadership and staff are doing everything in our power to work through the proper channels to resolve the CertifiCheck situation as quickly as possible.
Hundreds of chambers across the nation and over 80,000 retailers are being impacted by a company named Certifichecks Inc., who filed Chapter 7 liquidation, this weekend. The Ohio-based CertifiChecks Inc. offered technology solutions to local chambers to manage their gift certificate programs.
Like most chambers, we are working with our state Chamber and the Attorney General to identify the course of action to rectify this situation. We have put together an online communications network which includes chambers thought out the nation. We are currently in a holding pattern until we receive additional information from the State Attorney Generals office.
We are asking people not to panic until legal counsel can advise us on all of our options. A few chambers have already decided to stand behind the purchased CertifiChecks. The Muskegon Area Chamber of Commerce sold nearly $275,000 in CertifiChecks since January 1, 2008, many of which have been redeemed. There is no way to tell for certain how many are potentially circulating.
"We cannot do that until we understand how much money is out there. We cannot promise to reimburse people unless we know we are good for it”, says Cindy Larsen, Muskegon Area Chamber of Commerce president.
The Chamber Board of Directors is following the advice of our legal council, determining our potential liability and making decisions based on concrete information to best protect our Chamber members and the community. We will evaluate and reevaluate what is best for our membership as new information becomes available.
We thank everyone for their patience. Please be assured, the Chamber will keep the public informed as the situation progresses at www.muskegon.org.
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7 comments:
This crisis is related to the breakdown of the banking and investment system. When a customer purchased a gift certificate from the chamber or certifichecks, that money was deposited into KeyCorp Bank. The lag time from when the gift certificate was purchase and when it was used could range from 1 week to 1 year. KeyCorp was a part owner in this company. They would make short term investments with the money. Also there is a certain percentage of these certificates that are never redeemed, and so they put a percentage of the money in long term investments.
Now listen, what is worse, Sappi or Muskegon County Cash, the concept is great, it worked for some time, and this like many other businesses, did not survive. Many of us in business are carrying receivables that are becoming bad debt. That is the bad part of the business enviroment we are currently in. This cash is no different. I DO NOT BELIEVE THAT THE CHAMBER SHOULD BE THE UNDERWRITER OF THIS BUSINESS FAILURE. And for any business to think that all things are guaranteed, that is absurbed!!! No one is happy with a situation like this, but "bailout" monies do not exist to solve these types of failures. - S
Your example about the risk of holding receivables is interesting ... but it does not really hold up in this situation. As a business person providing credit we know and assume the risk that some receivables will become bad debt. That is part of doing business. Much of this Muskegon Money was purchased by individuals that were never informed of the risk. Now, it is true that maybe people should have asked and should have assumed that risk was involved. While any "Bail Out" will be painful, it is probably necessary. If the Chamber does not come forward and do the right thing it will be very difficult to gain the community's trust for the next special program the Chamber tries to promote to the community.
This is a very difficult situation, but damage to the MACC brand will be great if the organization insists on shifting blame instead of helping people through this situation. I do not think anyone disagrees that CertifiCheck really screwed over a lot of people with this situation. But remember, the Chamber's name was all over this program even if it was not the Chamber's fault.
What is the is talk about "Bail Out". When organizations stand behind and take responsibility for the products they promote is not a "bail out." The current state of banking, automotive and insurance in our nation where these weak firms come to the government with their hand out ... that is a bail out. The CertifiCheck program situation would be a bail out if the Chamber went to the city and said "can you front the money" to cover this problem. If an organization simply stands behind their product (even if it is at substantial cost to them) it is just a part of doing business. Something those of us in small business have to do everyday to keep our customers happy and to protect our reputation when mistakes happen.
I think the Chamber is being really responsible by not promising something until they know they can deliver on it.
I am amazed that no one had their eye on the ball? Was no one tracking the monthly purchase and redemptions of these certificates? Obviously no one saw this coming, but it seems that if for no other reason than to measure the effectiveness of the program someone would be tracking sales and redemptions. I would think that CertifiCheck would have supplied that type of reporting and that type of reporting would have been demanded by participating organizations.
In any case, I do agree that it would be irresponsible to make a promise to pay if there was no intention to do so, but it is a bit amazing that no one was tracking this and had information such as outstanding checks in their records. I am sure the Chamber will do the right thing but it is a bit painful to watch Muskegon sit by while other communities like Holland and Grand Haven had already made the right choice.
I know this is a very difficult time and I hope the Chamber is not harmed by this financially or image wise. If CertifiCheck is bankrupt there is little chance of being able to go after them for redemption ... I just hope people do not start demanding payment through the court system from the "presenters" of the program --- the local chambers. That would be really sad. But that may be where people end up turning because obviously there is not much hope of getting money for unsecured creditors out of a bankrupt company like CertifiCheck. The good news is that most people probably hold less than a couple hundred dollars of this paper and would not take the time or energy to file suit.
Good job to the leadership for standing firm during this hard time ... no matter what they do it would be criticized. Hard choices.
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