Yesterday, Bleeding Cool reported on the closing of discount high-item statue and figure store Mothers Basement.
Today we have received the following statement from Mothers Basement (the bold is our addition),
As you are probably aware, Mother's Basement was forced to cease trading on Monday February 3rd.
Since then, we have been made aware of some serious incidents involving the safety of our family and friends so we are issuing a final statement to make as many people as possible completely aware of the facts surrounding the closure of the business.
This business (Mother's Basement) began in June 2012 as a partnership and remained that way until the day we ceased trading. This means that the joint owners have always been personally liable for any debts.
In November 2013, we received a written offer of investment that we accepted. After some time of going back and forth, we were told on January 6th that the investors legal team would be drafting up an official agreement and the deal would be going ahead. As a result, we set up a limited company (Mother's Basement Limited) using exactly the same trading address we've been using since September and our own personal details as directors, with the aim to transfer over all of our business, assets and ownership to the limited company as soon as the investor came on board. Although it has been suggested by several customers, this wasn't an attempt to create a 'phoenix company' and remove all personal liability – the law states that the partners remain personally liable for all debts incurred before the company is incorporated, even after trading in place of the partnership begins, which never happened.
On January 17th, we were contacted by Streamline (our card merchant provider) to inform us that instead of taking any card refunds from our daily sales, which had been happening since we began trading, from October 2013 they had let those refunds accumulate and hit us with a huge unexpected bill, blaming a failed direct debit mandate. Not at any point between October and January were we contacted to let us know about this. If someone from Streamline would have contacted us in October, we could have done something about it back then. Instead, they insisted that we pay the bill off in full or they would take 100% of our card sales until the debt was cleared or we could pay large chunks off which we could not manage without incoming card sales. From January 21st, they began taking 100% of our card sales and this completely dried up our cash-flow. We attempted to carry on but this combined with the investment never materialising and a large influx of refunds due to our inability to fulfil orders on time, meant that we could not continue to operate as a business.
It has been suggested that we are guilty of fraud for taking money up front for pre-orders. To address this we would like to break down our business model and the changes we made over the course of 18 months to show that we never attempted to defraud anyone and in fact made every effort to change our business model and minimise risk for our customers.
When we began trading, we were very naive about how pre-orders should be dealt with. We knew that large traders didn't take any money up front but we were also aware (from personal experience) that pre-orders from these traders were often not fulfilled as they over-sold. This would prove to be a horrible situation on day of release, especially if it was an item that was sought after and pre-sold out.
Looking at other smaller retailers and their model, we decided to take an up front payment for pre-orders. This did in fact mean that PayPal (our exclusive payment provider back when we first started) would retain 70% of the income as a security measure and this would only be released when we had proven that the items had been sent out and we were a trustworthy business. In November 2012, we began using Streamline as an additional payment gateway but they didn't follow the same method as PayPal but that being said, the majority of our sales at that time of year were in-stock items running up to and just after Christmas. PayPal continued to retain that level of income until March 2013.
In April 2013, we sat down with our web developers and insisted that we change our model to incorporate payment plans and minimise the amount of money taken up front. We introduced PayBreak, a system where customers would pay a 15% deposit and then pay the remainder on arrival of the stock. We also introduced Easypay which was a similar system but the customer would pay a monthly payment to clear the balance before the stock arrived. We quickly realised that EasyPay wasn't minimising risk enough so we closed that option down after a month and stuck with PayBreak. We still offered the option for people to pay up front (on request of various customers) but after several months, we realised that this was still a major issue so in November, we made it mandatory to pay for pre-orders with PayBreak. Our developers had been working on an automated deposit system since August with the aim to reduce the deposit to 5% and make it possible for customers to pay their own balance online as soon as the item was in stock, rather than us asking for payment just before the item was due in. So in December we decided to reduce the deposits to 0% whilst the development was being finished, this meant we didn't have to manually take deposits and the risk was minimal for customers. This in fact resulted in over £90,000 of pre-orders with no money taken up front. In the New Year, the development still wasn't complete so we planned to continue with 0%. However, we had a large amount of customers ask us to take a deposit as they felt there wasn't any security in the order without one, so we started taking a 5% deposit on pre-orders.
Although long winded, hopefully this will show that we continued to take steps to reduce the amount of money taken up front and in no way did we plan to 'steal' anyone's money. The fact is, we haven't taken any money for ourselves. Every penny we had before starting the business and every penny we took during the business has been reinvested back into the business via the website, staff, marketing, equipment and so on.
Since we have ceased trading, a major creditor who gave us start up capital secured against stock and assets has legally seized whatever stock we had left. The remainder of the property was either on finance or leased, so this cannot be sold. This leaves us with nothing and as a result, we have a bankruptcy hearing next week. If we had anything to give, it would go to as many people as possible but we do not have a penny left. None of this is an attempt to drum up sympathy, these are purely the facts so the rumours about 'fraud' can stop.
To reiterate what we put on our website, here are the steps to reclaim your money if you are outstanding any orders or refunds
If the order was over £100 and you paid by credit card, contact your credit card company and reclaim the money via Section 75 of the Consumer Credit Act 1974
If the order was under £100 and you paid by credit card, contact your credit card provider and place a chargeback.
If the order was paid with a debit card, contact your bank and place a chargeback. Although it states online that orders under £100 are covered by a chargeback, we have received successful claims for way above this amount and after taking advice from a finance specialist, they advise everyone puts in this chargeback, regardless of the amount.
If you paid by PayPal within the last 45 days, open a dispute and claim your money back.
If you paid by PayPal more than 45 days ago, open a dispute. This will be automatically deferred by PayPal but they may revisit the claim if enough people open a similar dispute. After this is done, contact you bank or credit card company and place a chargeback. Either one of those ways will result in a payback.
Please make sure that any chargebacks are placed within 120 days of February 3rd and 540 days from the original transaction date.
For more information about Section 75, please visit http://www.which.co.uk/consumer-rights/regulation/section-75-of-the-consumer-credit-act
For more information about chargebacks, please visit http://www.which.co.uk/consumer-rights/problem/how-do-i-use-chargeback
If anyone's claim is refused, please take your claim to the Financial Ombudsman Sevice http://www.which.co.uk/consumer-rights/action/when-to-take-a-complaint-to-the-ombudsman
We are incredibly sorry that it has come to this and we truly wish that there was enough money left in the business to simply refund everyone, but we do not have anything. Please follow the above steps and get your money back through official channels.
To close, we must address the behaviour of some people.
Since ceasing trading, we have received personal and violent threats via text, voicemail, over the phone, email and on forums and social media groups. Our personal contact information and addresses have also been banded around online including a threat from 1 particular person to give out the address of Kate's elderly parents to anyone who lives in Stafford. This is completely unacceptable. Every comment, threat and, accusation is being treated very seriously and we are reporting every person to the police. We have everyone's correct data as we backed it all up before ceasing trading so the people who think they can hide their details and then threaten us are mistaken and have been reported to the police.
Every forum and Facebook group is being closely monitored and any threats are being dealt with by official channels. The local police are also aware of the personal information being sent out and have agreed to monitor the business and personal addresses of everyone involved with Mother's Basement. If anyone turns up at any of these addresses, you will be arrested and prosecuted.
Please go through official channels to reclaim your money. Please stop threatening us and our family. We have a 1 year old son and it is not fair for us or our family to have to worry about our personal safety as well as dealing with the fallout of a major bankruptcy. We understand the anger and frustration but none of it should be used as an excuse to threaten anyone.
We are happy to cooperate with any official investigation and we will share any evidence to prove we are not guilty of fraud with any governing or regulatory body.
All we can do is apologise for this turn of events. We tried everything to keep this business going and we have put our blood, sweat and tears in to this from day one. We are heartbroken and truly wish that there was something else we could do.
The Facebook Group Mothers Basement Has My Money, which has recorded amongst its members a debt of around £14,000, has offered the following advice,
First I have spoken to Companies House and spoke to Angela (Last name redacted) and she has out right stated that >>>Mothers Basement are not Dissolved or insolvent<<< and do not have any pending administration actions. As they are a new LTD company they need to do this to close.
She advised me to lodge a record with the Insolvency Service to prevent last minute insolvency action being taken by them. I have done this today on 08456013546, feel free to inform them too.
I have spoke to Andy at the Staffordshire Police Comm's Room and he has created an incident number for you all to use in you potential fraud investigation. You need to call and state that you have been asked to ring regarding the below reference and you wish to report your situation.
The Incident number is 415 – 04/02/2014
Staffordshire Police 03001234455 (UK)
You will each open a claim and will need to provide you account details and have records of sales and any email correspondence covering incorrect or misleading information being provided.
If your item was classed as "In-stock" please make sure you have explained this as if this item turns out to never have been in-stock then this could be classified as obtaining goods by deception.
Keep your unique crime ref for yourself, with the above incident it will be connected to all other claims making the investigation stronger.
After this is logged you then need to contact Action Fraud UK (who helped me set this whole situation up). I spoke to a lady named Marielle and she has informed her staff to expect a high volume of calls regarding this issue. Make sure you also state that it is logged with Stafford police and again provide the police incident reference number.
Call Action Fraud UK on 0300 123 2040
or from outside the UK on +441612349230
I have been informed this will go to the local police when a volume of people have logged their issues and the ball will start rolling.
First of all please be civil with the officers and only state FACTS not opinions or anger to them.
Secondly please only claim if you have a genuine claim against MB do not try it on if you have a vendetta and anger against them as this will only make it worse for the people affected.
Thirdly make sure you have accurate records
This will not be an over night thing and we need to tackle as a team.