Next card

Question 0

2 business goals of Nextcard

Answer 0

1 allow users to obtain credit card in moments

2 undercut avg. acquisition cost of obtaining new customer

Question 1

When was Nextcard founded

Answer 1

1997

Question 2

How much did Nextcard lose in 1999?

Answer 2

$77.2 million loss

Question 3

How was the CEO, Lent’s projections wrong? 2 things

Answer 3

1 average acquisition cost for new customers was much higher
Than projected

2 most internet users who signed up for NextCard had bad
Credit scores

Question 4

Nextcard allowed balances of users with poor credit to…

Answer 4

Go unpaid

Question 5

How did Nextcard’s executives conceal the company’s financial problems?

Answer 5

Understating Nextcard’s massive credit losses by refusing
To provide sufficient allowances each period for expected bad
Debts

Question 6

Next card officials had routinely and materially understated the companies allowances for…

Answer 6

Credit losses

Question 7

How did the EY auditors use improper professional conduct?

Answer 7

Altered Nextcard’s 2000 audit work papers to not same as bad
As they were

They committed obstruction of justice by destroying key evidence