From the beginning, Shopify has played a significant role in the Zadeh Kicks story. And if the story was a movie, Shopify would be a supporting character.
Zadeh Kicks launched on Shopify in January of 2014 utilizing the platform to power his e-commerce business moving off of ebay and onto a site of his own. The business steadily grew over the years, and in 2020 was recognized as a top 1% of all Shopify merchants. The following year, Zadeh Kicks logged more than 84,000 transactions including more than $70 million in Cool Grey Jordan 11 orders alone.
Shopify was the technological backbone of the Zadeh Kicks business. Orders were logged through the Shopify system so that owner Michael Malekzadeh could keep on top of the chaos of growth the best that he could, housing all transactions in one place. This included some of Zadeh’s largest buyers who would pay by offline methods, namely money transfer.
Shopify – More than a Shop for Zadeh Kicks
By 2020, Shopify became more than an e-commerce site for Zadeh Kicks – it acted as a bank that held records of deposits and credits of some of Zadeh Kicks’ largest customers. As one verified creditor told us under condition of anonymity, “wire transfers were made into Zadeh’s bank account and we received a record of the balance by gift cards sent to us through Shopify.”
“Our gift cards at Shopify represented a source of currency and the only place we could spend it was at Zadeh Kicks through Shopify.”
Buyers small and large, single personal pairs or thousands for the purpose of resale, were logged in the Shopify system.
Why the Receiver needs Shopify access
In addition to the crucial sales data needed for the forensic accounting to “follow every dollar” as the receiver is tasked to do by the court in the unwinding of the Zadeh Kicks business, access to Shopify is necessary in determining which customers were shipped shoes and which ones were not as all tracking numbers were logged in the Shopify system as well.
Once the news broke of the dissolution of Zadeh Kicks, an avalanche of chargebacks and complaints with Paypal were filed. While there has not been any numbers publicly released, numerous accounts of individuals shared commentary from customer service representatives that stated that they had never seen so many disputes for one merchant happen so quickly. Payment processors and banks that include Paypal and American Express reportedly set up special teams to deal solely with Zadeh Kicks chargebacks and disputes.
But just as the storm of disputes came in, the ability to access the information about transactions was shuttered.
Lack of Shopify Access
On May 25th, less than a week after the company went into receivership, Stapleton recorded notes that were submitted to the court discussing the Shopify backend and the suspension of the site. The following day, Stapleton attempted to make contact with Shopify to restore access.
The Receiver’s frustrations were documented numerous times with their monthly updates to the court and in one instance of providing a summary of communication with third parties, the Receiver noted that “Shopify has failed to respond to the Receiver’s requests to reinstate complete access to the company’s Shopify account.”
Receiver Requests Court to Take Action
After three months of no access to Shopify and no response from Shopify’s legal counsel, customer service, and despite service to Shopify USA in Oregon, the Receiver filed a declaration on August 22nd in support of a motion to compel Shopify to provide account access.
In the declaration, David P Stapleton stated that Shopify was served at their Oregon office with the Order Appointing them as Receiver, notifying Shopify that the Receiver cannot access the account, requested that Shopify preserve the account data and provide immediate access to the account, and explained that the Receiver was fielding time sensitive inquiries from PayPal regarding a number of chargebacks and required immediate access to the account to access the related data. Shopify did not respond.
Stapleton continued that on numerous occasions his team attempted to communicate with Shopify by email and submitted requests to restore access through Shopify’s Legal Access Request Portal, as directed by a Shopify representative. Their requests were denied.
Over the course of two months, Stapleton and his team emailed Shopify numerous times to various employees and Shopify’s General Counsel Jessica Hertz – former cabinet secretary for President Joe Biden. They did not respond.
Without access to the Shopify account, the Receiver only has incomplete reports and copies of Excel and .CSV files that are virtually impossible to “follow the money” which is needed of his team by creditors and the court.
On August 24, the Oregon Court held a hearing regarding the motion and granted the order compelling Shopify to do the following:
- Immediately reinstate access to the Receiver for the Zadeh Kicks Shopify account so that the Receiver is able to utilize the Shopify platform to analyze all data retained by Shopify for the account
- To the extent the Receiver does not have necessary login information, assist the Receiver in resetting account login information if necessary
- Continue to provide access to the Receiver to the Account and to otherwise cooperate with the Receiver as required by this Court’s Order Appointing Receiver dated May 19, 2022
- To the extent applicable, facilitate the Receiver’s ability to access Zadeh Kicks customer account information so the Receiver can access historical data regarding customer purchases from Zadeh Kicks prior to the appointment of the Receiver
At this point, there has not been any indication that Shopify has complied with the court order.
We contacted attorneys representing the Receiver but did not receive a response.
We reached out to Shopify and a Shopify spokesperson sent us an exclusive statement regarding Zadeh Kicks.
“Shopify believes in making commerce better for everyone, and we take concerns around the goods and services made available by merchants on our platform very seriously. Shopify’s Acceptable Use Policy (AUP) clearly outlines the activities that are not permitted on our platform, including deceptive practices, and we take action when stores are found in violation. Zadeh Kicks was removed from the Shopify platform earlier this year.”
