A startup who paid money to his users for training, went bankrupt

A few years ago, the media began to actively disseminate information about an unusual startup. In general, many startups can be called unusual, but Pact offered a unique work model. Namely - the company paid its users for training. Money in this case served as motivation, and the authors of the project argued that there could be no better motivation (in principle, they are not so wrong, are they?).



In order to start getting money, the user had to set certain fitness goals, and then stick to them. If everything went smoothly, the company paid the disciplined user money. The reward was offered very small, but it also served as a good incentive to continue classes. Although there is no, rather, a stronger incentive was the penalties for non-compliance.



Yes, the company automatically debited the user's money from the account if he missed workouts or did not reach his goal. Here the sums were already bigger - from $ 5 to $ 50. True, the amount of the fine was established by the clients themselves. $ 5 - the minimum price of a shirk. When registering in the application, the user had to enter the data of his credit card, from where the money was written off.



The results of the user work on themselves were evaluated every week. If by the end of the week there were no achievements, the client was punished with a “ruble”. Understanding that some users may be cunning, the developers added a number of "chips" to their application, which made it possible to verify the integrity of a particular person. For example, the program tracked user coordinates.



If he indicated that he was on a jog, while he was sitting at home at that time, the program “understood” that this was not true, and fined an unscrupulous fitness enthusiast. In addition, Pact had an agreement with a variety of gyms, in which users were noted.



In general, everything looked pretty decent. The idea, in general, is also not bad - because fines can really motivate users to play sports. Who wants to lose $ 5, or, moreover, $ 50 because of his own laziness? But in practice, everything looked a little different.



A few months after the release of the application, users started complaining about it. The fact is that software glitches led to the fact that money was withdrawn from user accounts even when the client deleted his account. In addition, the program is far from always correctly determining what a person is doing. He could do the exercises in the gym, and the program, due to a malfunction, incorrectly determined the coordinates and fined the ward allegedly for absenteeism. One of the clients complained that the company wrote off more than $ 500 from her account, and this happened for the second time.







As for the amounts earned, nobody became a millionaire. One of the active users of Post said that he managed to earn a total of $ 150 for two years of regular employment. Of course, the point here is not in money, but, probably, some users simply counted on good earnings and were mistaken.



It is worth noting that the startup stayed afloat for quite a long time. It was founded in 2011. Initially, the company was able to attract almost $ 2.5 million investment. Even PayPal co-founder Max Levchin invested in GymPact, then renamed simply Pact.



Another interesting fact is that the company announced its intention to cease operations even before bankruptcy. Pact executives announced the closure of the company in July of this year. The reasons that led to this decision were not reported. The following was stated : “Unfortunately, after many discussions, we have decided to close the Pact”.



After that, an investigation began by the US Federal Trade Commission (FTC), which obliged the company to pay its customers $ 948.7 thousand. Complaints of users were massive. Many claimed that they were not paid the due remuneration. We are talking about tens of thousands of complaints of disgruntled users of the application. Initially, the regulator demanded to pay $ 1.5 million, but the company did not have that kind of money, and the officials decided to pay as much as Pact had in the bank.