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New Refunding Policy

"GuardianRob"
Greetings Everyone,
I’d like to tell you about a new process called Creator Credit Refund that we’ll be rolling out.

In brief, anytime a product made by a creator is re-rated to Unsuitable for IMVU, the credits which normally would come from IMVU as a refund will now come from the creator of the product. Also, if a product is re-rated to Access Pass, and the owner of that product is not an AP account, the creator will also be responsible in refunding the credits to the people who purchased the product.

Here is some history on why we are doing this:

For the last year IMVU has been processing all refunds itself. Over the course of this time we've added 100s of Millions of credits to the economy as refunds. The majority of these credits are due to items being re-rated UFI.

These "free" credits are bad for the economy. They add in excess supply that shouldn't be there, and thus work against Creators being able to trade credits at a higher exchange rate. This “free” excess supply punishes all Creators for the bad-behavior of one Creator. It also deprives IMVU of future revenue, which is bad for us. We need to be able to keep our lights on, and this situation is not sustainable for our business.

When our business leaders sat down to discuss and find a solution to this problem, it was clear that the ownership of responsibility should be on the creators who make these products, and not fall onto the shoulders of just IMVU or the everyone else in the community. Furthermore, buyers of the products shouldn’t have to bear the brunt of the experience of having a product taken away and if so they should be compensated, by the person who caused the issue.

The following are the mechanics on how the new refunding system will work:

• When a refund is called for (ex. a GA product re-rated to UFI) a refund will be issued with the Creator who owns the product paying back their profits to their customers. Keep in mind this is the profit, not the entire cost of the product.
• IMVU will cover all derivation charges and IMVU's costs
• If someone has the credit balance in their account, great. They will be charged their portion of the refund.
• If someone doesn't have the credit balance, IMVU will cover their balance, but put their account into debt.
• When an account is in debt, any credits earned will go to paying off debt first. Any credits purchased, or transferred in will go to paying off debt first.
• If a debt isn't paid for after a period of time Customer Service will be notified and the account reviewed.
• Creators will be notified when a refund is issued, how many credits were issued, and how many people were impacted.
• Users will continue to get notification when they are issued a refund.
• Creators will only be charged for a refund that actually takes place. For example: A refund is issued because a product is re-rated AP, then the creator will only pay for the refunds for the products taken from users who don’t have an AP pass, all AP holders will keep that item.
• In the event Customer Service is mistaken in their re-rating, than customer service will refund the credits back to the creator. The creator will need to follow the existing process of disputing a re-rating to get this changed. The email for that help can be sent to ratingdispute@imvu.com.

The refunds system should not impact the majority of our creators. It will primarily impact those who don’t follow the VGP, or submit product that have a high chance of getting re-rated.

This is a business decision that is being moved forward so IMVU can improve the economy and ensure our long-term revenue, while improving the customer experience around refunds.

Also it is important to keep in mind that this is just refunds. Refunds could be issued for more than just a re-rating of a product. The flagging process is separate from refunds, and is being redesigned as we speak to improve the overall process, and make the issuing of a refund a last resort option.

This new process is planning to go live in a couple of weeks, so we are giving everyone a chance to prepare for this, as well as provide any constructive suggestions which we may need to consider for this new process.

At the bottom of this note you’ll find a quick FAQ with some further answers.

Thanks,
_________________
Rob "Guardian" Quick
Creator Community Manager
IMVU Inc.

FAQ

Q. Will everyone in the derivation chain have to pay the refund?

A. At this time, only the Creator will pay their profits and IMVU will cover all costs. We can’t say never, because we honestly don’t know if there will need to be a change in the future. Let’s use a quick example to explain: Let’s say a refund is issued for Product A. Creator 101 sold 10 of them for a total cost of 1,000 credits. Their profit was only 100 credits per Product A. The total amount of credits paid for the 10 Product as is 10,000 credits (1,000*10), but since Creator 101’s profit was only 100 credits, they are only responsible for 1,000 credits in refunds (100*10). IMVU would cover the other 9,000 credits (10,000-1,000).

Q. Doesn’t IMVU covering all of the remaining cost only going to continue putting extra credits into the economy?

A. In a small way yes. IMVU will be covering the derivation costs of other Creators (or their profits), but these are generally pretty small compared to the profit of the final product Creators. IMVU should bare its burden equally as well, and make sure we fully refund our costs (IMVU’s derivation and retail mark up fees) as well. We are just as accountable as the final product maker.

Q. How do I make sure I don’t have a refund issued?

A. Well nothing in life is 100%, but listed below are the top X ways to ensure you don’t have a refund issued:

1) Stick to the VGP! If you are concerned at all that a product might violate the VGP, then don’t make and submit that product. If you have any doubts, then so might others.
2) Ask your peers. The creator community at IMVU is pretty nice, and asks them to review your product idea/designs to determine if it might have a problem with the VGP.
3) Submit your product to Peer Review, but keep it hidden. If it fails, nothing happens. Your product doesn’t get sold, and can’t be charged a refund. If it passes, then you stand a pretty good chance of not having to ever issue a refund.
4) Don’t try and go into any “gray area” of the VGP. The VGP isn’t a set of hard and fast rules; it is a flexible living document. It is designed to adapt to situations, however purposefully pushing a product into a gray area, could work against you, so don’t do it if you are concerned. Ex. Having 1 single pixel of red showing in the minimum coverage guideline might not get you into trouble, but pushing it have only 1 red pixel covered, will probably not work in your favor.

Q. How will the refund process work?

A. • When a refund is called for (ex. a GA product re-rated to UFI) a refund will be issued with the Creator who owns the product paying back their profits to their customers. Keep in mind this is the profit, not the entire cost of the product.

• IMVU will cover all derivation charges and IMVU's costs
• If someone has the credit balance in their account, great. They will be charged their portion of the refund.
• If someone doesn't have the credit balance, IMVU will cover their balance, but put their account into debt.
• When an account is in debt, any credits earned will go to paying off debt first. Any credits purchased, or transferred in will go to paying off debt first.
• If a debt isn't paid for after a period of time Customer Service will be notified and the account reviewed.
• Creators will be notified when a refund is issued, how many credits were issued, and how many people were impacted.
• Users will continue to get notification when they are issued a refund.

Q. Will I always pay out a full refund to everyone who bought my product?

A. It depends. If your product has a refund issued against it, then you will pay the refund for everyone who has your product taken away that shouldn’t have it. If your product is re-rated from GA to AP, then everyone without an AP pass will have a refund issued. If any product is re-rated to UFI, then everyone will have a refund issued.

Q. Will a refund only be issued because of a re-rating?

A. Not necessarily. This is the most common scenario, but there are times when it could issued because a product is broken and the creator won’t fix the product, or other reasons. In these cases a refund could be issued.

Q. Can’t IMVU issue the refunds without touching my credits?

A. We could, but this isn’t fair to the entire Creator community and IMVU. For the entire creator community it is putting the burden for one Creator’s mistake on everyone. This can have repercussions on every Creator, and just isn’t fair to those who aren’t contributing to the problem. For IMVU it isn’t fair because it can hurt our ability to make money. If IMVU can’t make money we can’t keep the lights on. In economics this is called Tragedies of the Commons problem, and we won’t bore you with the details, but essentially, it means: If you put something out there for free with not repercussions people will unfortunately abuse it until the situation is ruined for everyone. We would like to avoid that.

Q. What does refunds have to do with flagging?

A. Not necessarily. A refund could be issued because of a flag; it could be issued for other reasons. It is important to remember that refunds only happen after a flag has been issued.

Q: What happens when a buyer uses Promo Credits and Refund is issued?
A: The buyer will receive a full refund from IMVU in Promo Credits. Creators do not pay anything.

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