One of the big rumor topics at Running USA is this article speculating that a race registration company is
“under heavy fire for delinquent payments and misrepresentations of balances owed to race organizations”
We have talked about it in our “Is Your Registration Company Safe?” blog. This comes on the heels of RaceIt closing in November (which could be a signal that an unbiased acquirer did not find enough value in the business to sell it, and simply shuttered it).
In addition to all of that, there is another shoe to drop. And that is races who fold. The registration vendor has likely paid out money to them, and as the master merchant may be liable for credit card chargebacks as angry registrants seek refunds. A race director who has used RunSignUp for several years has just closed races and is leaving creditors high and dry according to this article – http://www.startribune.com/debts-and-anger-in-wake-of-officers-fundraisers/471448074/.
RunSignUp has manageable risk in this case. There was another race series that recently experienced the same fate of having to close down. We manage our risk with a very heavy up front KYC process (Know Your Customer) that automatically uses a number of databases to minimize the risk of fraud, as well as a very advanced and automated chargeback challenge and refund policy. We are also starting to do automated registration comparison scans to identify potentially weak races. Also due to our size and distribution of customers and positive cash flow, we minimize our risks over the 15,000 races that use us. Clearly, though, there is more to do here to make sure good races are not infected by poorly run races.
So it is not just some registration companies that are using their “float” to cover expenses, but many races may be in a similar situation. This has a potential double-whammy effect on registration companies and the potential for a vicious circle of taking from one float to finance another float – meaning registration companies may be forced to pay races later, which will exasperate the float the race is counting on for operating budgets.
And in a generally declining market, this can be bad. Races and Registration companies have experienced a growth market the past decade and the slow down makes running their businesses a lot harder. It would not be surprising to see more and larger closing of races and reg companies in the future.