PropSwap makes colossal PR blunder after user gets stiffed out of $12.5k

[Dan Druff]

PropSwap has existed since 2015. It was founded by a guy named Luke Pergrande, and facilitates trades of prop tickets before they fully resolve.

For example, say you bought a $1000 "First MLB Team to Win 20 Games" ticket for +6000 for the San Francisco Giants. Right now the Giants are tied for the MLB lead with 11 wins, so obviously your ticket has far more than $1000 equity at this point, but also far less than the $61k value it will have if it actually wins.

Say you'd rather just take a nice win right now, and think to yourself, "If only I could cash this for $16k today, I'd totally do it."

PropSwap enables that. If you can find a buyer, you can sell your prop tickets to other individuals at any point before they resolve.

The seller lists his ticket on PropSwap. If a buyer agrees to the price, he pays PropSwap. At that point, the seller is instructed to send the physical prop ticket to PropSwap via FedEx or USPS. When the ticket is received by PropSwap, they take a 10% commission, then release the money to the seller. PropSwap then places a hold on the credit card of the seller, until the ticket can be verified as authentic. They then hold the ticket until the bet resolves. If it wins, they send the ticket to the buyer to get cashed.

Unfortunately for PropSwap, an unexpected situation came up, where a buyer named "thecat123454" got screwed by the seller. This involved an Eagles Superbowl Championship ticket paying $38,292, which thecat123454 bought for $5400.

thecat123454 got the bad news that the ticket was never sent in by the seller, and there was also an issue with the seller collecting the full money on the ticket for taxes. For some time, thecat123454 got nothing at all. The tax matter reportedly occurred because the original ticket was at odds greater than 300:1, which triggers tax withholding.

thecat123454 raised the issue to PropSwap, expecting they'd cover it, much in the same manner Stubhub will cover counterfeit or inaccurate tickets sold through their service.

Instead, they sent him just $25.7k -- a shorting of over $12,500. When he complained, he received an obnoxious and condescending response from PropSwap, which he then posted to X.

Embedded Tweet

https://twitter.com/thecat123454/status/1909653437178167314





But did the story end there?

No... it was just getting started. You won't believe what happened next...

[Dan Druff]

PropSwap's email to thecat123454 was already bizarre.

They refused to cover the difference, but instead bragged about all the money they spent on lawyers to "contact the seller"?

This, of course, drew the immediate ire of most of the sportsbetting community. People were outraged that PropSwap wasn't covering shortages against buyers. Why were they taking hefty 10% fees, then? What are they even doing for the buyer, aside from matching them with sellers? How come lack of buyer protection wasn't clearly disclosed on the site?

Indeed, to this day, their own site's FAQ says nothing about the buyer taking any risk.

11 hours after the situation was exposed by thecat123454, PropSwap attempted to calm the angry people on X with this stupid statement:




This got people even more outraged, and people were wondering why this company was torching its reputation over a matter of just $12.5k. Were they really this clueless?

It would get worse. Read on...

[Dan Druff]

It is not even clear why the ticket was never sent to PropSwap, but instead retained by the seller until it won. The PropSwap FAQ claims that the process requires the seller to send the ticket to PropSwap in order to get paid. I think it's possible the seller had remorse, and just decided to hold onto the ticket the entire way and screw the buyer, and PropSwap never told the buyer what was going on.

Note that PropSwap bragged to thecat123454 that they had put in a lot of effort to get him the $25.7k he received!

Presumably they had their lawyers harass the seller until he sent that much, and then patted themselves on the back for it.

But look at their statement. It drips with arrogance, comparing themselves to StubHub and eBay, yet not guaranteeing the transaction like those sites do!

Despite all the nasty responses, they dug their heels in and would not pay the other $12.5k.


On April 10 around noon -- about 48 hours after thecat123454 posted about the situation -- he posted an update. He claimed the PropSwap CEO called him, and agreed to pay $6k of the $12.5k. LOL!! Are you kidding me?

Embedded Tweet

https://twitter.com/thecat123454/status/1910406597433593902

Update, today I talked with PropSwap’s CEO on the phone and they offered me $6k today, which I am happy about receiving. They also shared with me a plan about options for the full $12.5k moving forward, and improvements they are making to their process to prevent this sort of situation from occurring in the future. They wrote a public statement and will be sharing it on their X/Twitter profile, as well as appearing on Elf's Spaces today.

While thecat123454 seemed almost satisfied with the resolution, the public was not. The public got even more riled up when the ridiculous update statement was posted by PropSwap. The below now-deleted statement from PropSwap -- attempting to turn this debacle into a marketing opportunity -- will go down in history as one of the worst corporate tweets ever:





You read that right. The company was challenging the sportsbetting community to sign up 1200 new users to PropSwap (all of whom have to deposit $10 or more, or it doesn't count), and they'd pay thecat123454 in full.

So basically they're challenging their X critics to deposit money on their site in order to pay one of their stiffed customers.

No, this wasn't a late April Fools joke....

[Dan Druff]

Jeffrey Benson, the well-liked Director of Operations of the Circa Sportsbook, decided he couldn't stay silent any longer, responding to the (now-deleted) tweet with an appropriate GIF....

Embedded Tweet

https://twitter.com/JeffreyBenson12/status/1910418458820698154

Embedded Tweet

https://twitter.com/JeffreyBenson12/status/1910419822099480693

Embedded Tweet

https://twitter.com/JeffreyBenson12/status/1910420614671982765


They also continued doubling down against other critics:

Embedded Tweet

https://twitter.com/PropSwap/status/1910419884284273000

Embedded Tweet

https://twitter.com/PropSwap/status/1910416651335442521

Embedded Tweet

https://twitter.com/PropSwap/status/1910416377338265909

Embedded Tweet

https://twitter.com/PropSwap/status/1910415811476336859

Embedded Tweet

https://twitter.com/PropSwap/status/1910415347720630495

Embedded Tweet

https://twitter.com/JamesCato98/status/1910476959316160944

[Dan Druff]

Finally, PropSwap cried uncle and just paid the full amount to thecat123454.... but only after destroying their own reputation forever.

In their final statement on the matter, they limited X replies only to the relatively few people they follow.

They also have not allowed replies from the public in the subsequent tweets regarding different subjects. They are in lockdown mode right now.




But what about this moron CEO who caused all of this, and presumably operated the X account?

[Dan Druff]

Here is CEO Luke Pergrande at The Masters -- a rather expensive journey for a guy who can't afford to pay $12.5k in order to keep his company's reputation intact!

A post shared by on Jan 01, 2017 at 12:00pm PDT

 

https://instagram.com/p/DIR0fDhRl24/

He's obviously the one on the right.

One X user said, "He looks exactly how I'd expect him to look."

Ouch!


But prior to agreeing to fully pay thecat123454, he appeared on a popular X Spaces show run by a young guy who goes by Elf, and took a beating from his critics.

Jump to the 27 min mark to hear the CEO make excuses for why they did their ridiculous marketing offer, and to the 0:54:27 mark to hear the WagerWire (competitor) CEO completely own Luke.

Embedded Tweet

https://twitter.com/yElff_/status/1910437198022992192

[Dan Druff]

It's not clear to me why Luke the CEO was so unbelievably stubborn and defiant here.

Arrogance?

Horrible people skills?

A subconscious desire to kill his company?

Weird entitled attitude where he felt he was justified by principle?

Broke?

A combination of all of the above?



My guess is that Luke is struggling financially, and sending that $12k would cause him enough pain to where he really didn't want to do it. He also might have felt that he already did so much for thecat123454 (who apparently wasn't paid at all, initially) that he deserved plaudits and gratitude for getting him $25.7k after a lot of effort, rather than social media shame.

By the way, the company takes 13%, not 10%, from most transactions. 10% always comes from the seller, and 3% comes from the buyer if they have to deposit rather than use existing funds sitting on the site. Luke defended the 3% as "going toward payment processing", and said that the 10% is necessary for their cost of providing the service, but is not enough to guarantee transactions. At the same time, he kept bragging about an "0.0002% fraud rate", which would mean that they SHOULD guarantee transactions if the fraud rate really is that low.

He can't have it both ways. Either the fraud is rampant enough to where PropSwap can't cover it and manage to stay in business, or it's extremely rare and therefore SHOULD be covered. He can't have it both ways.

He also seemed to completely misunderstand social media, believing that non-customers had no right to criticize his company, which of course is absurd.

I can't imagine many people using PropSwap after this debacle.

USA Today even covered the matter. Sometimes you really CAN have bad press.