Former longtime employees of The Knot have accused the wedding giant of defrauding investors and advertisers to land a $1 billion sale in 2018. Years later, with a possible IPO looming, Forbes found some troubling practices remain.
By Alexandra S. Levine and Richard Nieva, Forbes Staff
Ata Potbelly sandwich shop on Fulton Street, lower Manhattan bustling on a February day in 2017, Jennifer Davidson sat listening to her rattled, soon-to-be former colleague tell her about chaos at the wedding planning giant where they worked, The Knot.
The employee, who’d tendered her resignation days earlier, detailed to Davidson explosive allegations of widespread fraud perpetrated against some of the company’s biggest advertisers. Without clients knowing, she and her teammates had been ordered by higher-ups to go into internal systems to quietly change the terms of lucrative contracts The Knot was failing to deliver on, Davidson recalls the employee telling her.
Davidson, who’d worked at The Knot for more than two decades, most recently as its global fashion director, said the allegations echoed problems she herself had witnessed. She’d found evidence of other troubling practices as well—happening both when The Knot, founded in 1996, was a public company (under parent XO Group) and as negotiations were underway for a nearly $1 billion sale to a pair of private equity firms in 2018.
Major partners like Macy’s and David’s Bridal were spending millions of dollars a year on some of the most valuable ad real estate on The Knot when this inventory did not always exist, and executives had then sent employees scrambling behind the scenes to find somewhere to put the ads or alter the original agreements altogether, according to Davidson. Several of the contracts that she’d personally overseen, including with big-name fashion houses like Allure, Justin Alexander, Maggie Sottero and Kleinfeld Bridal (of “Say Yes to the Dress” fame), had been changed discreetly without telling the clients, she said. And tech glitches plagued The Knot so regularly that ads vendors had paid for would inexplicably disappear from the site or never run at all, she added.
“These clients trusted us with their valuable marketing dollars,” Davidson told Forbes. “For far too many, we promised a Ferrari but we showed up in a rickshaw.”
“All of this just seems so intense for a company that’s a wedding company. It’s not like chemical weapons.”
Rachel LaFera, an 18-year Knot veteran who was most recently director of fine jewelry, said a second subordinate detailed to her how she too had been directed by senior management to alter client contracts and “how pervasive it was.” Another longtime senior employee, who left The Knot this year, told Forbes two more employees had confided in her the same—that an executive had forced them to improperly change numbers and falsify reporting for national advertising, which in turn may have projected to Wall Street a rosier picture of revenue than was the reality. And across the company in a different department, still another recent staffer told Forbes people focused on engineering, product and design regularly face similar demands to cross ethical lines today. (More than a dozen people who’ve worked at The Knot since the 2018 sale expressed similar concerns.)
“The culture of senior people standing over [us] and saying ‘do this or else’” was not uncommon, said the employee, who left this year. “It was all to drive the bottom line.”
Tim Chi, CEO of The Knot Worldwide, said in a statement that “we take these allegations extremely seriously and do not tolerate fraudulent practices, misconduct, or retaliatory behavior of any kind.”
“The claims made by former XO Group employees were extensively investigated in 2017 by both internal and external counsel,” he said. “All claims of widespread misconduct were unsubstantiated. Our independent auditor for over 20 years, Ernst & Young, LLP, has determined The Knot’s financial statements accurately represent the operating results of the business, in all material respects, for every year since 2001.” The Knot’s owners, Permira Funds and Spectrum Equity, declined to comment. The whistleblowers responded that “XO Group did not perform a ‘thorough investigation’ of our claims, much less one that was independent, transparent, and committed to the truth of the reported misconduct of a then publicly traded company.”
Justin Alexander told Forbes it has asked The Knot for an audit of the last six years of its advertising. Kleinfeld said it had not been aware of issues at the time. Macy’s, David’s Bridal, Allure and Maggie Sottero did not respond to multiple requests for comment. Chi, the CEO of The Knot Worldwide, said in his statement that “our partners are the heart of our business, and we only succeed when they succeed. It’s my priority to preserve their trust, while maintaining our safe and transparent work environment.”
‘The Irony Of The Knot’
The Knot has long been one of the most popular online destinations for brides and grooms to find inspiration and vendors, and create websites and gift registries, for their weddings.
But an examination of government filings, public records and internal company materials; reviews of hours of audio recordings and a trove of text messages; and conversations with two dozen current and former Knot employees, advertisers and vendors, and legal and business experts reveal a company struggling to hold its ground. In the wake of the pandemic, and facing stiff competition from upstarts like Zola and tech titans like TikTok, Instagram and Google—which have made it easy for couples to find vendors directly and threatened to cut out the middleman altogether—many say The Knot has devolved into a dog-eat-dog, money-at-all-costs business that defies the feel-good nature of wedding celebrations and pressures staff to cross ethical lines.
“That’s the irony of The Knot: it has a very festive facade,” said the longtime senior employee who recently departed, describing what she called a culture of fear and intimidation.
“All of this just seems so intense for a company that’s a wedding company,” she added. “It’s not like chemical weapons.”
Davidson said that when she and her peers escalated their concerns back in 2017—including their beliefs that The Knot was counting revenue for services it hadn’t yet or would never deliver, and deceiving investors—they went unanswered and led to retaliation and legal threats. That prompted several of them to bring matters to the board, and later, to the Justice Department, Securities and Exchange Commission and Federal Trade Commission.
The whistleblowers include Davidson, LaFera and Cindy Elley, an account executive who left The Knot in 2021 after 19 years. (Elley and Davidson are sisters.) The women have alleged The Knot—where they worked for a combined six decades—has been committing financial fraud for years and that executives “accelerated revenue” and orchestrated “a textbook pump and dump” to drive up the company’s stock price before it was sold for almost $1 billion and merged with rival WeddingWire in 2018. (They said the alleged fraud, some of which was first reported by The New York Post, has occurred in Local and National, the divisions that drive the most revenue and where all three women had worked. Sales there were “dysfunctional and overstated,” they claim.)
“They bought a crock of shit.”
“I can’t believe that they haven’t come after them—the WeddingWire people,” a former top executive at The Knot said this year in audio obtained by Forbes. “They bought a crock of shit.”
“Getting out was the best thing I could’ve done,” said the leader. “I would’ve been on the executive team, so if they ever did get caught, I would’ve been part of it.”
The whistleblowers—who first detailed their experiences in an essay on Lioness, a platform that helps insiders come forward with stories in the public interest—told Forbes they have gone to authorities with allegations of “ongoing violations of federal laws by both former and current company management.” The SEC and FTC declined to comment, and the DOJ did not respond to Forbes’ inquiry. Anni Jones, a spokesperson for The Knot, confirmed that the whistleblowers’ allegations prompted the U.S. government to investigate the company in 2017 and 2018—the same time negotiations were underway for XO Group’s eventual, big-ticket sale to Permira and Spectrum. But she said the private equity firms were well aware, the probe was closed in 2019 (within three months of the merger closing) and that no enforcement action was taken. She added that federal regulators have not notified The Knot of any inquiry into its business practices since then.
Still, the whistleblowers’ coming forward, and fresh claims from employees today, could create obstacles as the company may be starting to eye another potential IPO. More than a dozen current and recent employees claim, and materials and communications obtained by Forbes show, that as The Knot struggles to deliver to the PE firms that now own it, the company is misleading wedding vendors about ROI to get them on board; hiking rates; putting the vendors on auto-renew and making it nearly impossible for them to cancel their contracts. (The FTC in June announced sweeping action against Amazon for allegedly doing this to lock customers into Amazon Prime; Amazon said the agency’s claims were “false on the facts and the law.”) Two people familiar, and communications reviewed by Forbes, suggest The Knot may be seeking tax writeoffs for company projects that some employees believe are not eligible for such breaks.
Sean McKessy, the first chief of the SEC Office of the Whistleblower, said that while he could not comment on The Knot specifically, these types of claims would be of interest to the agency.
“That’s the bread-and-butter of what they’re supposed to be there to enforce,” he told Forbes.
One Of The First Down The Aisle
Weddings have exploded into a nearly $70 billion industry in the U.S.—churning out some 2.6 million weddings a year—and The Knot was one of its earliest digital pioneers.
The company was founded in 1996 by husband-and-wife entrepreneurs David Liu and Carley Roney, and their partners Michael Wolfson and Rob Fassino, with $1.6 million in seed funding from AOL. Liu and Roney’s own wedding in Washington D.C. had been a comedy of errors, and they saw a major need for technology that could help couples navigate the planning process start-to-finish in a way that magazines simply couldn’t. And though people were, at the time, not yet buying things on the internet, the founders saw in wedding registries an opportunity to be early to the online shopping craze.
Liu walked into a pitch meeting with billionaire AOL bigwig Ted Leonsis with a copy of Brides Magazine to make his case.
“I still remember: He picks it up, brings it to his nose and flips through the pages and goes, [sniff]: I don’t know anything about this industry, but I smell money,” Liu later recalled on NPR’s How I Built This.
In the years after the internet giant threw its weight behind The Knot, what began as an early social network—where couples could crowdsource information about weddings through chatrooms—evolved into a wedding planning portal, online gift registry and ad-backed e-commerce hub. The founders quickly won the support of wedding gown industry icons like Kleinfeld Bridal CEO Ronnie Rothstein and JLM Couture CEO Joseph Murphy, whose companies became some of The Knot’s first and most loyal fashion advertisers. In interviews with Forbes, both praised the original team and product and said it was, at the time, a boon to their businesses. Rothstein said Kleinfeld came to spend $400,000 a year on The Knot.
“I was in shock that they sold it for what they did.”
The founders took the company public on the NASDAQ just before the turn of the millennium; scooped up competitors like WeddingChannel.com, run by Adam Berger (who is now managing director of Insight Partners); and slowly grew their wedding upstart into an empire catering to major life milestones. Beyond the big day, The Bump would help couples starting a family and The Nest would help them build a home. Those and several other brands were eventually brought under an umbrella named XO Group, helmed by CEO Mike Steib and staffed by tech talent that would later hold top positions at TikTok, Meta, Peloton and Vimeo. (Mark Zuckerberg’s brother-in-law is a former executive vice president.)
“We were never doing this for the money,” Liu said on NPR. “We never thought [of] the word ‘exit.’ ‘Exit’ wasn’t part of our vocabulary.”
Six months after the podcast, XO Group was sold for nearly $1 billion to private equity firms Permira Funds and Spectrum Equity. It was taken private and merged with rival WeddingWire—which Permira majority-owned—to form a new joint venture called The Knot Worldwide, a linchpin serving what the firms estimated to be a $250 billion global wedding industry. It would stack its board with tech heavyweights like the former president of Instacart, CEO of Booking.com, CFO of Zillow and president of U.S. News & World Report. (Liu did not respond to a request for comment.)
Rothstein, the Kleinfeld CEO, said the price tag was “unbelievable”: XO Group sold at $35 per share, almost double the stock price a year earlier and considerably higher than where it had hovered since the formation of XO Group in 2011.
“I was in shock that they sold it for what they did,” said Rothstein. “I just don’t understand what the story was that they were telling that got an investor to put up that kind of money, because for us, and for some of the designers that I spoke to, The Knot had lost a lot of their effectiveness.” Kleinfeld today spends a fraction of what it used to on The Knot, relying more on social media.
Some employees told Forbes that the success executives were touting publicly to the board and investors did not always jibe with what staff were seeing behind closed doors. One former sales employee who left in 2020 after almost 8 years recalled how when “all hell broke loose” in 2016—a year when the company switched to Salesforce and attempted to launch a now-defunct “concierge” program to help usher couples through the wedding planning process—leadership painted a different picture to the outside.
“The earnings call was like, ‘We had a little bit of a bumpy start, but everything’s smoothed out, we’re doing great, we’re selling, we’re moving forward, we’ve got lots of clients that are stepping up,’ just like, everything is fine,” the person said. “And it wasn’t.”
“If you tally up a picture, it seems like shady management, before and after the acquisition.”
The person, who claimed to have left The Knot over ethical concerns, added that what they were seeing was more than just a company in disarray: “There were specific people actively changing data, in more ways than one, to make it look like the company was doing better than it truly was for the American dream: to sell the company, to cash in on your money, your shares, your profit and move on.”
Jones, the spokesperson for The Knot, said the company is audited yearly by Ernst & Young and that it uses strong internal and external controls to ensure the accuracy of its advertising data. Ernst & Young did not immediately respond to a request for comment.
Just Married
Some at The Knot before and after the deal in 2018 said they’d characterize WeddingWire’s acquisition of XO Group as a hostile takeover. (Internal documents show employees were also instructed to downplay to customers the antitrust implications.) WeddingWire’s cofounder and longtime CEO Tim Chi was made CEO of The Knot Worldwide, and most of The Knot’s C-suite was gutted. From top to bottom, employees who’d made noise about or had knowledge of the alleged fraud were pushed out, according to the whistleblowers. The Knot did not respond to a question about whether people who’d raised concerns about potential wrongdoing had been forced out before, during or after the sale. But Jones, the Knot spokesperson, said company policy prohibits retaliation against employees who report concerns and that they can do so anonymously through The Knot’s compliance hotline.
Got a tip about The Knot? Reach out securely to reporter Alexandra S. Levine on Signal/WhatsApp at (310) 526–1242, or email her at alevine@forbes.com, and reporter Richard Nieva on Signal at (510) 463-4164, or email at rnieva@forbes.com.
The whistleblowers have also questioned the due diligence done on the 2018 deal, raising concerns that XO Group was acquired in part based on what the company described as “non-public, unaudited financial forecasts” that were “subjective in many respects.” They allege that occurred even though a year before, in 2017, XO Group had been forced to disclose publicly that there had long been loopholes in the numbers it was reporting to the SEC and investors. (Outside auditor Ernst & Young discovered a “material weakness” when reviewing how the company had been counting revenue: “In our opinion,” the firm wrote in 2017, “XO Group has not maintained effective internal control over financial reporting.”)
In 2017, The Knot told the SEC that these issues were due in part to the very problem whistleblowers Davidson and LaFera, the rattled employee who’d resigned, and the other subordinates had witnessed: the company had, in fact, counted in its revenue money from advertisers who did not get what they paid for, it disclosed in a filing. The company said the problem had occurred in The Knot’s National division, one of its largest generators of revenue, but concluded that “the errors” in that key department were “not material” to the business’ bottom line—meaning not a big enough deal that investors would care.
The following year, in 2018, a group of investors filed a class action lawsuit accusing XO Group of putting out a “false and misleading” proxy that left out crucial financial information relevant for WeddingWire’s acquisition of XO Group. (Such litigation is not uncommon in corporate mergers, and the suit was voluntarily dismissed by the plaintiff.)
McKessy, the lawyer who built the SEC’s whistleblower program, said whether a material weakness would change the way an investor is thinking about investing in a company is “so entirely subjective.” But he noted that he would likely have questions about a company’s unaudited financials, especially if a recent audit had found problems with its reporting.
Jones, the spokesperson for The Knot, said the company and its private equity sponsors did extensive due diligence as part of the merger process and that The Knot “considers the 2017 matter thoroughly investigated, concluded and immaterial to our business.”
Sell It ‘With A Bunch Of Lies’
The Knot has downplayed the whistleblowers’ allegations by trying to distance today’s business from that of its predecessors, noting that ownership and leadership changed with the sale in 2018. But more than a dozen people who’ve worked at The Knot since the merger claim some troubling activities persist there today, speculating that the company is struggling to meet the demands of its private equity owners. Wedding vendors currently working with The Knot have raised many of the same concerns, and The Knot had its accreditation with the Better Business Bureau revoked in 2020, the nonprofit confirmed.
“There are so many red flags,” Daniel Keum, an assistant professor of management at Columbia Business School, told Forbes. “If you tally up a picture, it seems like shady management, before and after the acquisition.” But it’s unclear if the company broke the law, he added.
One current account executive at The Knot, who has worked there for more than a decade, claimed in recent texts obtained by Forbes that the company is making it nearly impossible for wedding vendors to cancel their contracts, and they’ve hiked fees 30 percent to juice revenue.
“Everybody’s on auto renewal; you could have cancer and you can’t get out of your contract,” they wrote in the messages. “Not only do I have to sell, I have to handle so many cancel calls, upset auto-renew calls, it’s simply ridiculous. The ROI is the pits, and there’s really nothing you can say to people. But I have to.”
“The process now is new business sells it with a bunch of lies,” they added in a text. And a former member of the account retention team, who left in 2020 after nearly a decade, said salespeople were instructed to tell prospective clients verbally that they could cancel anytime, but then they would send a contract with different terms to lock them in for a year. (The Knot’s policies state that vendors agree to an initial 12-month minimum term; after that, the contract auto-renews on a month-to-month basis. Customers trying to downgrade or cancel after that first year are advised to email a helpline.)
Rhode Island wedding photographer Samantha Robshaw, a single mother of three, had been a loyal customer of The Knot and WeddingWire for years before trying to cancel her contract when the pandemic effectively put her out of work. She said the company refused. “I was literally crying on the phone,” she told Forbes. “I was like, ‘I can’t pay this $500 a month. I have children to feed and a house to keep. And they just were like, ‘Yeah, that’s a shame, sorry.’”
“As someone who had paid them thousands and thousands of dollars, you just would have thought that they could have been a little more accommodating,” she added. “But they just really, really did not care.”
Wedding DJ Brandon Stray, owner of All About You Entertainment in Cleveland, Ohio, said The Knot refused to let him cancel when he informed them he’d been getting “zero ROI” and nothing but scam leads despite spending thousands on advertising, a big chunk of change for his small business. He said he had to go to the extreme of canceling his credit card to fend off The Knot’s charges, but that they’ve still refused to remove his listing. Today, it reads: “WE DO NOT DO BUSINESS THROUGH THE KNOT OR WEDDING WIRE.”
“Out of all the events that we do, none of them have come from The Knot—not one of them,” Stray told Forbes, even though The Knot, on its website, boasts advertiser access to “the largest audience of engaged couples, anywhere.”
Shane McMurray, founder of industry trade group the Wedding Report, said that while some vendors do get quality leads from the platform, he estimates 60 percent do not. It has generally become less effective for vendors because “the whole directory model is dying,” he told Forbes: Survey data shows word-of-mouth recommendations, and internet searches, are today more integral to wedding planning than websites like The Knot and WeddingWire.
“As someone who had paid them thousands and thousands of dollars, you just would have thought that they could have been a little more accommodating.”
Advertising issues seem to have persisted after the sale with larger partners, too. One former staffer, who joined the national advertising team after the sale and worked on million-dollar campaigns with top-tier clients David’s Bridal and Men’s Wearhouse, recalled how they bought ad units in 2020 that never went live. Neither company responded to a request for comment.
But the alleged present-day issues also appear to extend well beyond advertising. Two staffers told Forbes, and communications show, that they’d been instructed to create documentation The Knot could use to receive tax writeoffs that the workers did not believe it was actually eligible for.
The documentation was related to The Knot’s capital expenditures, or CapEx, which are funds spent on a company’s physical assets, like equipment or property. In some cases, R&D can also qualify. But some who’d been asked to document and submit a year of their creative and design work as capital expenses felt it misrepresented what they’d actually been doing. (Analysts and investors often look at CapEx to assess the financial health of a company, and two decades ago, in one of the biggest accounting fraud scandals in American history, WorldCom exaggerated its profits by billions by improperly documenting its CapEx.) One former employee, who claims they’d been ordered to screenshot everything they’d worked on within that tax year to submit as CapEx, described their division of The Knot as “corrupt as hell.” The Knot declined to comment on the CapEx allegations.
One recent vice president of sales, who left The Knot last year, lamented on an internal Zoom call that there’s a constant tug-o-war between Knot employees and the PE firms pushing them to ever-greater limits so the firms can make a return on their investment. “People that aren’t in the day-to-day, in the weeds, they don’t know what it’s like to talk to a vendor, they know nothing about the wedding industry, they wrote a check, gave us a lot of money—ultimately, they’re our bosses at the end of the day,” they said in a recording obtained by Forbes.
A member of The Knot’s HR staff, who left in 2023, said that over the last year, the company has doubled down on making money at all costs—an effort driven by its new CMO who previously ran marketing for Uber. While the person acknowledged employees’ widespread frustration with that shift, they spoke highly of leadership and the way they’re steering The Knot through an ever-more competitive climate, namechecking Zola as a threat. Zola did not respond to a request for comment.
“As far as I was aware, we were not in any sort of financial trouble; we just were at a point where revenue became very important or more important than it had been,” they said. “The idea was that this is temporary. It’s not forever. But right now, we really wanted to focus on making money.”
The Road Ahead
Many insiders say The Knot has never recovered from the billion-dollar sale and acquisition—even as it may be angling toward another IPO.
“They think that WeddingWire buying them was a success?” a former top Knot executive said this year in audio obtained by Forbes. “They are doing terrible… I don’t know what they’re going to do, but they’re going to have to raise money. There’s no way they’re making money. I think Zola is eating them for lunch.”
One of the longtime senior employees who left this year after almost a decade said The Knot today is “really struggling to stay relevant,” that it has “a huge issue” with clients not wanting to renew their contracts and that it’s “scrambling” to find advertisers.
The whistleblowers’ accusations that The Knot has long misled and defrauded advertisers are already prompting outcry in the industry. Longtime Knot advertiser Justin Alexander, a global bridal designer and manufacturer dating back to the 1940s, emailed businesses in its retailer network last week to say it was “deeply troubled” by the allegations.
“We hope The Knot will address the claims more directly to bring more clarity to the situation for all partners,” it wrote in its blast to the wedding world. “We believe in maintaining the highest standards of integrity and professionalism and this extends to all our partners, including The Knot.”
