The Federal Trade Commission may have renewed interest in justice for crowdfunding backers. Emails set by The Verge shows that the agency is investigating at least one crowdfunding campaign that has gone bad – iBackPack – which raised more than $ 700,000 across Indiegogo and Kickstarter.
The backpack creator Doug Monahan marketed the device as a Wi-Fi enabled battery packed backpack that would provide gadgets on the go, providing a local place for the user's friends. It will be launched on Indiegogo in 2015 and Kickstarter in 2016. Years later, the backpack has not yet been sent, although some bakers have received "beta" accessories, such as batteries and cables, some time ago. Monahan's two previous campaigns never reached their funding goals, but were eventually used to promote iBackPack.
"My name is [name redacted] and I'm with the Federal Trade Commission, the Bureau of Consumer Protection. Our office received many consumer complaints that they never received the iBackpack they ordered. We reached out to crowdfunding platforms that offered the product to get a list of backers, and that's how I got your e-mail. I just wanted to see if you've ever got your backpack? I'd really appreciate it if you could let me know, then we want to take steps to prevent further fraud in crowdfunding platforms. Thanks in advance. If you have any questions, please call me at [number redacted]. "
In a statement to The Verge FTC said, "FTC surveys are non-public, so we generally do not comment on whether we investigate a company or not." The name and number of the email is checking out as a legitimate FTC employee, and the address belongs to the .gov domain.
Kickstarter confirmed FTC's investigation in a statement to The Verge . "Last year we received and responded to a civil investigative demand from the FTC seeking information about this project," said a spokesperson. "The vast majority of Kickstarter creators complete their projects as promised, but those who abuse our system and trust in backers reveal themselves for legal actions."
An indie gogo spokesman would not comment on "rumors or pending investigations" to "make sure that we do not disturb these investigations." The company also noted that it does "everything to comply with law enforcement when an investigation is in progress."
FTC published only a public survey in 2015. Erik Chevalier raised more than $ 122,000 for a board game and later sold back's data to external companies. FTC settled with Chevalier for closer to $ 112,000. He was later ordered to cease disclosing or benefiting from the personal information of the customer. The FTC also forbade him from misrepresenting any future crowdfunding campaigns or resigning repayment policies. (Chevalier told backers that they would get the money back, which never happened.) The FTC wanted him to repay backers, but apparently he used all his money on rent and other personal expenses so he could not do it.
At the time, the FTC said it was okay with the core idea of crowdfunding and the risk involved, but it wanted to make sure that backers money really went against a product and that the creators did not get rid of it. "Consumers should be able to trust that their money will actually be spent on the project they funded," said Jessica Rich, who was then the director of the FTC Consumer Protection Agency.