CLIQ Digital AG: Not the COVID beneficiary you thought
How deep is Netacy Inc. connected to grant scams? We found evidence that CLIQ's US subsidiary operates sites alleged to be engaged in consumer fraud and allegedly advertises through impersonation.
Disclosure: We have no position or financial interest in CLIQ Digital AG nor do we receive any compensation for our work. Read the full disclaimer here before continuing.
CLIQ Digital AG (DE000A0HHJR3, Market Cap: EUR 150 million) describes itself as “a leading digital lifestyle company, providing consumers worldwide with streaming entertainment services”1. Yet, questions about the business practices of its various subsidiaries and the almost non-existent marketing of its main entertainment platform remain open. Even some news outlets refer to CLIQ as a “black box”. Especially its North American business, generating close to 50% of all of CLIQ’s revenue in the first nine month of 20212, remains opaque. With today’s report, we provide evidence that their only US subsidiary Netacy Inc. (hereafter Netacy) is deeply linked to multiple websites alleged to be engaged in government grant scams and users reporting that these websites were advertised through means of identity theft. These websites explicitly target groups suffering from financial hardship. We think that these websites are completely unrelated to the business of providing “streaming entertainment services” publicly promoted to investors.
The goodwill reported for Netacy at the end of 2020 was EUR 0.4 million compared to total assets of EUR 76.97 million. While Netacy might thus be of minor importance for CLIQ’s balance sheet, we are of the opinion that its business possesses distinct reputational risks to the group.
Trademarks
Netacy is a Delaware corporation founded by CLIQ in the early months of 2018.3 Questions about the exact type of business conducted in North America raised in the Q2 2021 conference call were answered ambiguous and evasive, see a record of the call here (Questions on Netacy starting at around 17:15). One quote by Ben Bos, member of CLIQ’s management board, on the question of Netacy was that business is
“all depending in each individual territory, what kind of licenses we can get hold of.” […] “there are differences in each individual territory.”
- Ben Bos (Q2 2021 conference call at around 18:10)
This raises the question which kind of licenses Netacy holds in North America.
Back in 2018, simultaneously to the announcement of the expansion to the US market, CLIQ disclosed that Netacy had “also exclusively licensed the rights for specific concepts and content from the US company Hippo Investments, a long-standing partner of CLIQ Digital”4. Similar disclosure is provided in the 2018 annual report.
Hippo Investments LLC (hereafter Hippo) is another Delaware corporation, founded less than six months prior to Netacy.5 With no website and strong corporate privacy laws in Delaware, barely any information about this entity exists. The United States Patent and Trademark Office (USPTO) lists Hippo as the owner of three active trademarks. If, as according to CLIQ’s annual report of 2018 (page 8), CLIQ holds an “exklusive[n] Lizenzvereinbarung über das Vermögen der Hippo Investments, LLC” this license agreement should also include the three trademarks listed at the USPTO.
The trademarks were transferred to Hippo on the same date as the company formation of Netacy from Mutual Minds LLC (remember this name for later).
Websites
The word marks and logos are used on respective websites
While these websites do not directly disclose any owner, they all refer to the same address in the footer: 8 The Green Suite #8392, Dover. According to CLIQ’s annual reports, Dover is also the city where Netacy Inc. resides, see the first image at the top.
Searching for this address yields multiple websites with almost identical content such as smarterseniorliving.com, benefit-relief.com or unitedfamilynetwork.com. The former additionally refers to netacy.com for opt-our requests and lists an address in Florida, as does the site holidayrelief.com.
This is the address listed as CLIQ’s office in Florida:
The Better Business Bureau (BBB) comes to a similar conclusion, linking netacy.com to multiple of the aforementioned sites and the addresses in Dover and Tequesta. Click here to view BBB’s assessment (proxy or VPN needed to access the BBB from outside the US).
While OpenCorporates lists multiple companies named Netacy, we think that Netacy Inc. is the entitiy behind netacy.com (and thus the other websites stated before).
First, the Florida Netacy LLC was only incorporated in January of 2021, years after netacy.com was first archived with almost unchanged content since. Second, the California Netacy LLC, registered some month before Netacy Inc., filled for dissolution in November of 2019, whereas netacy.com remains active up to today.6
A final piece of evidence is that the URL american-hoperesources.com (inactive but almost identical name to the website stated before) is hosted on the same IP (18.184.80.201) as multiple of CLIQ’s other websites, such as clausmobi.com or ldplys.com. Only 21 domains are hosted on this IP address of which we assume all to be linked to CLIQ.
Business model
The self-described business model of these websites (exemplary for spaoa.org) is stated in a court filing by Mutual Minds LLC from June 2016.7
It is noteworthy that these websites explicitly target groups in financial hardship and exceptional circumstances such as single parents or expecting parents.
Before signing up as a member, the user has to accept the terms and conditions, thereby agreeing that the contact information is shared with an extensive list of “Marketing Partners”. See the following images taken from two different sites (the list of marketing partners is the same across websites).
Reviews
The feedback by people who had contact with those websites is overwhelmingly negative.
Multiple users state that they were being contacted on social media by imposters pretending to be a relative or friend advertising for American Hope Resources grants or offerings (see examples here, here, here or here). Others report receiving unwanted messages with links to these websites (see here). The Better Business Bureau and Trustpilot list several dozen of complaints. Similar reviews are also given for other sites than americanhoperesources.com, see for example here.
Many of the reviews mention points also described by the Federal Trade Commission (FTC) in its article on government grant scams.
Our Conclusion
In our opinion, this post shows that Netacy is operating various websites engaged in alleged consumer fraud and grant schemes, targeting vulnerable groups of society in times of financial hardship.
While we can only estimate the importance of this business for CLIQ’s bottom line, we would assume that it is allocated to the section “Digital marketing services” in its annual report, as it is unrelated to the business of “Digital entertainment services” provided by the other subsidiaries.
Note that we save the discussion on CLIQ’s main business model, the “Digital entertainment services”, for a later day. We advise all readers to scrutinize our posts and do their own due diligence on the North American business and CLIQ in general.
Follow us on Twitter @MephistoRes.
We thank the Twitter user @mopeng for providing the first lead on Netacy with his post on Nov. 10.
Excerpt from the Delaware Division of Corporations for Hippo Investments LLC:
Note that there exist two other US entities named “Hippo Investments LLC” according to an OpenCorporate search. While one of the two was only founded in September of 2021 we were unable to find detailed information on the other, founded in 2007 in Florida. We were only able to identify that its president, Herbert W. Gullquist, is a life trustee at Northwestern University, giving no evidence that this entity might hold licenses of interest to CLIQ. In our opinion, the sum of the various pieces of evidence presented in this post lead to the conclusion that CLIQ refers to the Delaware Hippo Investments LLC in its disclosure.
Interestingly, the California Netacy LLC and Mutual Minds LLC, the conveying party of the word marks, are closely linked. Their registered address is less than 2km apart, whereby the office of Mutual Minds is registered at the same address as a Mailbox center.
Multiple employees share work experience at both Netacy LLC and Mutual Minds LLC (see here, here, here or here). One of them describes her joint work experience in the following way:
