FTC sues smart backpack creator for allegedly using crowdfunded money to buy bitcoin

The Federal Trade Commission is suing a man for allegedly running away with more than $ 800,000 that he raised in crowdfunding platforms under the premise of creating an intelligent backpack and other products. The Verge first broke the news of the iBackpack investigation in August, but today marks the agency's first recognition for its work.

The lawsuit states that the creator, Doug Monahan, did not use his indiegogo. or Kickstarter funds to develop or deliver the backpack, but instead put the money in cash for "various personal expenses," including the purchase of bitcoins, withdrawals at ATMs and to pay off credit cards. The agency also claims that the supporters approached Monahan, but he ignored their complaints, closed the company and stopped communicating.

Monahan launched several campaigns under the name of iBackpack, including a second-generation version, before delivering the first. . The complaint states that the Indiegogo staff began asking about the status of the backpacks in November 2016, and Monahan said that they were in the "full production and shipping phase" and that the company had already sent the backpack to "hundreds, if not thousands "of sponsors. . At the same time, according to the complaint, Monahan told supporters that they would not receive units until December 2016 and then delayed until the fall of 2017. No complete units were sent, says the FTC. Monahan also closed the iBackpack website, the Facebook page and all corporate email accounts, according to the complaint.

The lawsuit continues to claim that Monahan threatened the defenders who complained. In one case, he allegedly told a client that he knew where they lived. He allegedly told another that he would sue them and their employer for defamation and slander. The FTC is seeking reimbursement for sponsors and a "permanent injunction" to prevent Monahan from re-using crowdfunding.

This is the second time that the FTC has gone after a crowdfunding campaign. In 2015, he settled with Erik Chevalier, who raised more than $ 122,000 for a board game and then sold the sponsors' data to outside firms. The FTC reached an agreement for about $ 112,000. Subsequently, Chevalier was ordered to stop divulging or benefiting from the personal information of the clients. The FTC also prohibited him from misrepresenting future crowdfunding campaigns or lying about reimbursement policies.

Collective financing always carries risks for sponsors, and platforms admit it, but they are starting to create more robust systems to ensure that creators make the products they promised. Indiegogo has launched the guaranteed delivery, which retains the funds raised until the creators send their products. It is optional, but the idea is that these campaigns could raise more money than usual because the sponsors know that they will recover their money if the project does not work.

Kickstarter says it works with the creators before the launch of their campaign to verify their identity and make sure they contact the sponsors. Jon Leland, senior director of strategy and knowledge at Kickstarter, recently said The Verge that Kickstarter is looking to build "a series of tools related to transparency in campaigns" that are "quite radical".

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