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5 Questions with PerkStreet CEO Dan O’Malley

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Dan O'MalleyI had the opportunity to ask the CEO of PerkStreet, Dan O’Malley, a few questions via email near the end of last week, courtesy of their COO Jason Henrichs. As you know, PerkStreet announced they’d be shutting down and would not be paying out any outstanding perks.

People were understandably upset livid. Social media exploded and the poor employees, who would soon be out of the job, were trying to put out raging infernos with spoonfuls of water.

Maybe I can be calmer about it because I didn’t have a PerkStreet account (I thought their mission was great, I just didn’t need a debit card and I’d been trying to simplify my finances), but things got really nasty and personal very quickly. PerkStreet wasn’t really a bank, it was a startup with a very ambitious goal, and they failed. They ran out of money, couldn’t secure more, and had to shut down.

Dave Ramsey, on his show, called them slimeballs. That’s a gross overreaction. But he had to say that, he was embarrassed that he was paid to endorse a product and the product failed. What was he going to say to callers who were upset? (in fairness to Ramsey, he did say that any losses people had in perks weren’t going to be big, that you weren’t getting rich off rewards, and that people should calm down)

I asked Dan a few questions to get to the human side of it because I figured anything “official” would have to be sent through lawyers and sanitized. Here’s the very brief email interview.

1. How have the last few days gone for you and Perkstreet since the announcement?
It’s been a tough time. We let most of our employees go and had some hard goodbyes with people that have been in the trenches together for a while. We have had a team that has been absolutely committed to what we were doing, that believed we had a shot at changing the industry. While the company was not successful, I believe that we did show that financial services firms can put money back in their customers’ pockets in new ways.

2. Did you anticipate the level of outrage over the closure? Are there plans to try to mitigate that? Dave Ramsey was not pleased on his show.
We understand why customers are unhappy and it’s incredibly disappointing for customers to not get their perks. We just don’t have any other options. If we’re able to find a way for customers to be paid perks, we’ll do it.

3. Are there any plans to try to sell Perkstreet? Perhaps to another bank willing to pay out the perks?
We are continuing to have conversations that could result in the sale of the company or the payment of perks. We’ll continue to try until the very end.

4. What is your opinion of the banking and finance industry and has that changed?
I like working in financial services because you can have a real impact on people’s lives and because the industry needs help. I still believe that. But it is very, very hard to create a new company in the space. And the changes in the industry since the financial collapse have only intensified the difficulty. I don’t think that changes my belief that we need more companies started in financial services, however — it just means you need to be extremely hard-headed to do so.

5. Is there anything you wish you had done differently? Anything you want people to know?
Whenever you try to build a company, the list of things that you should have done differently in hindsight is huge. Too long to list here.

Update: If your PerkStreet account was with Provident Bank, you actually got a statement credit for the full value of your perks on August 15th. If you closed your account, you’ll be getting it as a check in the mail. A nice gesture by Provident Bank, not sure if Bancorp will be following suit.

No one is sailing away on a big luxury yacht… and the big takeaway from this is that it’s not necessarily the end of perks. I wouldn’t hold my breath but the potential for a somewhat positive ending is still there.

{ 7 comments, please add your thoughts now! }

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7 Responses to “5 Questions with PerkStreet CEO Dan O’Malley”

  1. The Warrior says:

    Hopefully there is some small return of gains even if not equivalent to what is earned.

    I know this guy is getting a ton of heat, but at the end of the day, it doesn’t sound like he is in any better situation than those customers heated that they won’t be getting their $10.54 in rewards back.

    The Warrior

  2. Good interview. I’ve seen a lot of the backlash as well, and can understand it to a certain extent. I was not a PerkStreet customer, so it really doesn’t impact me, but I thought they had a good model…just not sustainable.

  3. I do think the reaction was overboard. Most people thought they were losing their actual money. I have talked with a few of them and had to explain that they were just losing their perks, which is not guaranteed anyway. I did hear Dave Ramsey and I think his words were a little harsh, but he had to protect his brand and his endorsement potential.

  4. freeby50 says:

    I’m puzzled about what people think would happen. The company is folding. Where do they think the money is going to come from? I believe the terms and conditions of the program does say the rewards are subject to cancellation. Its unfortunate that Perkstreet is shutting down and people are losing some money.

    Theres no FDIC for rewards points folks…

  5. helpful55 says:

    I think that this was bush league or beyond. I got my Perk Street account because it was offered and I was fine with an online banking service. That part of this all has been great. The perks to me were not of big importance, but I had built a few up and was waiting until the right time to redeem them. If they were not able to continue with their business model why didn’t they modify the payout or drop it and safeguard the perk holders money, which is exactly what in effect it was. Instead they ran the company into a hole and took us all. There was no warning to us, they kept it a secret. They should have ceased the bleeding when the company went in the red, or at least notified us. Also this was not like a bankruptcy. In that case you can lose what you have, this was different. I feel that my money was stolen. My actual bank account, is like many of us, through Bancorp, so I suppose that’s good, but even there I am going to start checking in to see more about them. This reflects on them somewhat, they also should have kept an eye on what PerkStreet was doing elsewhere. To anyone who says that this is overblown is wrong. It is wrong to do something like this, in this manner, I don’t care what their rules say. It doesn’t matter the amount, this was immoral.

  6. Dan lied to Dave Ramsey, repeatedly defrauded his customers (and worse) . . . why else do you think his investors — finally — cut him off?

  7. Dave says:

    I think there were signs that Perkstreet was experiencing problems. They stopped offering the juicy new-account bonuses in 2010; some of the later bonuses were less juicy and required like 30 debit card uses to get it. Also, the cashback and perks got worse and harder to get anything more than 1% last year. So, this company was slowly reducing its costs by reducing its perks payout. And, now, they have lots of perks that they will never pay out. That’s hard. What’s worse, the CEO, COO and CFO probably got paid well, and got large severance. The investors, they get whatever is left; but, they, too, lost.
    -I feel bad for people who relied Perkstreet for their cashback on their purchases. It’s sad that these people never relied on what Dan probably has in his wallet–the Capital One credit card. He worked there.

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