Vonage Has Customer Quandary

Updated from 2:30 p.m.

Last week's selloff taught one Vonage (VG) customer a lesson she won't soon forget.

Nina Shreiber, a novice investor who has been a Vonage customer since 2004, tried to buy shares in the Holmdel, N.J.-based company's initial public offering. Vonage, saying much of its success has been "attributable to our customers," earlier this month allocated 15% of the IPO to users.

"It saved me a lot of money and I thought it was a cool service," says Shreiber, a 29-year-old New York talent manager, in an interview.

Vonage looked cool to any number of people leading up to last Wednesday's $531 million IPO. But when Shreiber tried to buy IPO shares, she first was told her purchase didn't go through. Then, after the stock plunged more than 12% on its first day, she learned that she did get some stock -- which by now was more than $2 below its offering price.

Now Shreiber, like many other small investors in Vonage, is wondering what to do. And the company, which sought to garner support for its stock by allotting shares to customers, faces brickbats from users who say the allocation process didn't work.

In response to complaints like Shreiber's, the company said in a statement to CNBC Tuesday that it would make whole customers who bought the IPO. But the statement didn't make clear what the terms of any offer might be or how many buyers might be involved, and Vonage didn't respond to requests for additional information.

Earlier this month, Shreiber says she requested 5,000 Vonage shares, the most she could get.

On the evening of May 23, when the IPO was priced, Shreiber says the Vonage IPO Web site reported that her purchase never went through.