VPN firm says it didn’t know customers had lifetime subscriptions, cancels them

"We acknowledge that notifying users after the deactivation was a poor experience ..."

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[jock2nerd]

Also this is obviously bullshit, right? Otherwise an incredible business hack would be

1) take out massive loans to build a service

2) sell just the service, without the debt, to another company

3) your company with no service and lots of debt goes out of business

4) go work for the new company with lots of infrastructure but no debt

This was the business model for a lot of gyms, until people got wise and stopped plonking down big upfront membership fees.

 

[jock2nerd]

From TFA: A VPNSecure representative claimed on the reviews site Trustpilot that the current owners “did not gain access to the customer database until months” after the acquisition. According to VPNSecure’s owners, their acquisition netted them “the tech, the brand, and the infrastructure/technology—but none of the company, contracts, payments, or obligations from the previous owners.”

If the new owners claim they didn't buy the liabilities(i.e. the existing subscriptions), what exactly was their plan to obtain cash flow? After all, they just claimed the customer contracts still belong to the sellers. And just how did the sellers expect to service the obligation to provide service if they sold off all the infrastructure to provide that service?

Seems like there is enough fraud and conspiracy to commit fraud charges in this deal to keep prosecutors and investigators busy for years.

I presume they looked at the re-occuring revenue coming in from customers with monthly, quarterly or annual billing.

BTW I don't see any obvious fraud issue here, just carelessness in understanding the customer base and a botched job in dealing with the customers with "lifetime" contracts with the original owner.

No question that they f'ed up the relationship with these lifetime customers.

When you are buying a company worth a few hundred thousand dollars, it obviously isn't economic to spend a greater equivalent amount doing due diligence.

 

[jock2nerd]

In between: you buy all the coffee machines from the cafe, and set up a new cafe in another town. Do you now owe payments on the loans of the previous cafe?

Bad example, because there may be liens in the machines.

Better example is the previous owner was being sued by customers and, providing the equipment purchase was an arms-length transaction, in buying their equipment, you don't get to inherit their lawsuits.

BTW Fear of undisclosed legal risks is one of the most common reasons asset purchases occur.