‘The Knot’ swindles advertisers, fosters ‘culture of fear’: ex-workers

‘The Knot’ swindles advertisers, fosters ‘culture of fear’: ex-workers

The Knot has been accused of systematically swindling clients for years — from major corporate retailers like Macy’s to mom-and-pop caterers and dressmakers — and ex-workers claim former top executives have aggressively silenced those who tried to raise alarms, The Post has learned.

Vendors who spoke with The Post complained they bought premium ads on the go-to wedding planning site to lure new clients, banking on the 27-year-old site’s reach and name recognition — but instead received useless spam leads and middling rankings in The Knot’s ad-search results.

“A whole lot of people who are paying to be on that first page miss out,” said Vitaliy Pysmennyy, the owner of Cleveland-based Vitaliy Photography, who griped that he consistently falls off the first page of results across northern Ohio despite shelling out for a contract that promised top placement.

“All these practices are actually going on and nobody can stop it,” Pysmennyy added. 

The frustrated photographer is more right than he knows, according to four ex-employees who went public with the explosive allegations for the first time in exclusive interviews with The Post.

Pysmennyy provided a copy of his contract for “featured” tier placement on The Knot’s website, and a former sales employee confirmed that “featured” refers to first-page ads.


(From left to right) Cindy Elley, Jennifer Davidson and Rachel LaFera spoke to the Post about The Knot’s alleged practices.
Courtesy

The former employees claim that The Knot’s former parent company XO Group lied to major corporate clients for years as it charged a premium for ads to be targeted for particular customers — such as brides searching for dresses in a given market — even though the company knew it lacked the inventory to satisfy the terms, three former employees allege.

“I was aware that large-scale media partners were being ripped off, including David’s Bridal and Macy’s,” one of the whistleblowers, Jennifer Croom Davidson, told The Post.

The whistleblowers likewise claim that executives at The Knot’s former parent company XO Group ignored or downplayed rampant tech glitches that meant ad campaigns often failed to meet agreed-upon contract terms — possibly in a sham effort to polish the firm’s books ahead of a nearly $1 billion sale of the company in 2018.

“I am positive that the company at the very highest levels knew that it had serious issues with delivering the ad programs it was selling to its clients because I informed these individuals personally, repeatedly and by every means of communication available — both verbally and in writing,” Davidson added.


The Knot has been accused of systematically swindling clients for years.
The Knot has been accused of systematically swindling clients for years.
The Knot

It’s unclear if the alleged shady dealings with corporate advertisers have continued under its current management group, The Knot Worldwide.

The company’s other big advertisers have included Walmart and Crate & Barrel.

Macy’s and David’s Bridal didn’t respond to requests for comment.

The company denied any wrongdoing in a lengthy statement in response to the whistleblowers’ allegations.

“In this case, former employees of XO Group, Inc., which operated The Knot, relayed their concerns to leadership before parting ways with the company years ago.

Their concerns were taken seriously then, as they are taken seriously now,” a spokesperson for The Knot Worldwide said in a statement.

“The senior leadership team who were alerted to these concerns and worked at XO Group Inc. prior to the merger with WeddingWire, Inc. in 2018 are not a part of The Knot Worldwide today.

At the time, an external law firm was engaged to conduct a thorough investigation into the complaints made by the former employees.”

“The investigation found that XO Group accurately reported financial performance in all material respects, and any claims of widespread misconduct were unfounded.

XO Group also cooperated with federal regulators who did not pursue enforcement action based on these allegations,” the statement added.

Founded in 1996, The Knot has long served as an advertising platform for major retailers in addition to smaller vendors such as florists, bakers, caterers, bands and dressmakers.

Campaigns for corporate clients frequently cost more than $1 million, sources said.


Jennifer Davidson
Jennifer Davidson was formerly the global fashion sales director at The Knot.
Jenn Cady Photography

In 2018, XO Group went private in a $933 million merger agreement with rival WeddingWire.

XO Group shareholders were paid $35 per share in cash — a 27% premium over the company’s stock price at the time.

The rebranded company, dubbed The Knot Worldwide, includes The Knot’s flagship website, WeddingWire, parent-focused site The Bump and several other platforms.

“I can’t believe they have not come after [XO Group], the WeddingWire people,” a former top sales executive at The Knot said earlier this year in a recording obtained by The Post. “They bought a crock of s—t, basically.”

The Knot’s allegedly shady ad sales practices, however, continued even after the WeddingWire merger, which was brokered by the latter’s primary investors, London-based buyout giant Permira and Spectrum Equity — according to claims by the former employees as well as vendor interviews and online reviews posted by small business owners.

Permira declined to comment. Spectrum Equity did not respond to a request for comment.


Permira
Permira is one of the co-owners of The Knot Worldwide.
Permira Advisers Llc

Issues could be small, such as a missing photo or banner, or much bigger, with some campaigns running in the wrong place on the site or not at all, according to the former employees.

The glitches, which surfaced before the 2018 merger, allegedly impacted both local small businesses and national corporate clients who advertised on The Knot, the whistleblowers claim.

When the crisis peaked in 2016, a now-departed senior executive at XO Group allegedly pressured media strategists — many of whom were junior-level staffers — to bypass an internal compliance system and re-slot the ads to run in different, lower-visibility parts of the website, according to the former employees, who described a toxic workplace inside the beloved wedding planning hub.

The executive “basically stood over their desks and made them click the buttons that changed the way the reporting was configured,” added another employee, who claimed to have learned of the situation after the fact from other workers and spoke to The Post on condition of anonymity. “They knew it was wrong but they didn’t know what to do.”


Spectrum Equity
Spectrum Equity co-owns The Knot’s parent company.
Spectrum Equity

When staffers raised alarms, the former employees claim their bosses began a toxic campaign to wash their hands of responsibility and silence workers by pressuring them into signing non-disclosure agreements.

Davidson was one of The Knot’s first-ever employees and reached the level of global fashion sales director prior to her exit in 2017.

She told The Post she witnessed the pressure campaign firsthand – and was effectively forced out after speaking up.

“[Junior staffers] being instructed by senior-most executives who were holding them individually in rooms and stating ‘you’re going to change your story to fit our story. No executive told you to do this to these contracts,’” Davidson said.

Three of the former employees who spoke to The Post — Davidson, Cindy Elley and Rachel LaFera — also went public with their allegations against The Knot in a firsthand essay published by Lioness, a media platform that represents corporate whistleblowers pro bono, fact-checks their accounts and publishes them online.


Rachel LaFera
Rachel LaFera alleged there was “a culture of fear” at The Knot under past management.
Anna Carrano

Davidson, LaFera and Elley confirmed to The Post that they have formally reported their concerns with the specific allegations about the sales practices and workplace environment outside of the company to federal authorities.

They declined further comment on their outreach efforts.

While the company was allegedly in chaos, The Knot’s former CEO Mike Steib and other top executives fed a rosy outlook for the business to Wall Street analysts — often praising the performance of the company’s website.

In one instance, Steib declared in a March 2016 earnings call that the company’s platforms “were significantly improved and are now, I believe, the best in our industry.”

Steib, who left The Knot in 2018, declined to provide a comment for this story.

“We would listen to those earnings calls and what we were hearing that was being stated out to analysts and the Street did not align at all with the picture that we were seeing internally,” said Davidson.


Michael F. Steib
Mike Steib is The Knot’s former CEO.
Ally

Davidson said she was outraged when her warnings about the problem — including two separate letters to XO Group’s board of directors in early 2017 and calls to an internal whistleblower hotline — went unheeded.

In one such letter obtained by The Post, Davidson and LaFera alleged that colleagues had been “forced to misrepresent facts and lie to our valued media partners and shareholders, while our management team stands over them and demands they do so to hit company financial goals.”

Davidson and LaFera said they and other XO Group employees who spoke out about apparent wrongdoing faced retaliation — including the withholding of bonuses and other forms of pay — and were eventually forced out of the company.

“In my opinion, the culture was one that was toxic and a culture of fear,” said LaFera.

LaFera said she told her superiors that contracts weren’t being delivered as promised “for over a year and a half” after the new website’s launch — with no resolution.

She described one incident in which an “agitated” client shredded her over the issue in the middle of a crowded trade show.


The ex-employees claim that The Knot’s former parent company lied to major corporate clients for years as it charged a premium for ads to be targeted for particular customers -- such as brides searching for dresses in a given market.
The ex-employees claim that The Knot’s former parent company lied to major corporate clients for years as it charged a premium for ads to be targeted for particular customers — such as brides searching for dresses in a given market.
Getty Images/iStockphoto

“I was essentially being handed my backside in the middle of the convention floor as my colleagues and superior looked on,” LaFera said.

XO Group publicly admitted something was amiss in 2017, when it disclosed in an SEC filing it had “identified a material weakness in our controls over national online advertising revenue recognition.”

The filing also noted that accounting firm Ernst & Young had given an “adverse opinion” in its review of XO Group’s statements for 2016, determining it had “not maintained effective internal control over financial reporting.”

The specific cause of the “material weakness” was revealed during a tense all-hands meeting for the national sales division in March 2017, when top brass pinned the blame on employees and accused unnamed staffers of altering the ad-targeting terms for some contracts without permission, sources told The Post.

At one point during the meeting, the same former senior executive who allegedly pressured media strategists to bypass the internal compliance system appeared to deflect responsibility for the crisis.


Cindy Elley
Cindy Elley was a sales account executive in XO Group’s local marketplace division.
Frog Prince Photography

“I just want to reiterate that I always operate to do what’s best for XO, and to me, that means being innovative and creative within bounds. If I ever gave the impression that that was different, then that was a mistake,” the executive said at the meeting, according to a transcript obtained by The Post. “We should never be crossing lines.”

Advertising deals accounted for the bulk of XO Group’s revenue, which amounted to $115 million from local and national clients in 2017, the last year the company publicly disclosed its results.

Last year, Insider said it had obtained 56 consumer complaints filed against The Knot by jilted small business owners through the Federal Trade Commission, including one that alleged “about 70%-80% of the leads are scams.”

Elley said vendors frequently receive “unqualified leads” that are “irrelevant geographically, not specific to the client’s business or even with a past-due wedding date,” according to her own experience and conversations with colleagues who worked with ad clients.


The Knot has denied any wrongdoing in a lengthy statement in response to the whistleblowers’ allegations.
The Knot has denied any wrongdoing in a lengthy statement in response to the whistleblowers’ allegations.
Getty Images/iStockphoto

“In my opinion, the company sanctions strong-arm sales tactics and is aware that its sales team is often making claims to small businesses about the quick return on investment the business can expect when signing up to advertise,” added Elley.

For example, The Knot’s sales team regularly nudges prospective advertisers with promises “they will pay for their advertising program investment by the time their second ad payment is due,” according to Elley.

In other cases, vendors were promised a steady stream of high-quality sales leads, or told they will lose out on a particular ad rate unless they commit to “sign up on the spot,” even though the rate “would have absolutely been available, to my knowledge.”

“Essentially, what I observed and regularly heard about was overall promises of a quick return on investment, when it was an open secret that this was often simply not the reality,” Elley added.

LaFera first joined The Knot in 1999 and was sales director of XO Group’s fine jewelry division when she left in 2017.

Elley, an account executive in XO Group’s local marketplace division, exited in 2021 after 19 years at the company.

While the quality of sales service and customer leads has allegedly declined, The Knot’s current leadership team has allegedly locked new vendors into 12-month minimum term contracts that are difficult to exit, sources said.

“I haven’t gotten a lead that I don’t think would have found me otherwise,” said one South Carolina-based vendor who spoke to The Post on condition of anonymity. 

“People have a lot of trouble canceling once their contract is up,” the vendor added. “The Knot will just ignore them and start their contract up again. You have to really keep on them to get them to cancel.”


Source by [New York Post]

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