- In a complaint filed Monday, the FTC accused startup iBackPack and its founder Douglas Monahan of operating “a deceptive crowdfunding scheme.”
- According to the complaint, he raised over $US800,000 for a number of products, including the namesake iBackPack, which was supposed to come equipped with batteries for charging laptops and phones, cables, and a Bluetooth speaker.
- According to the FTC, he never delivered on the products, and instead took the money for himself.
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In a complaint filed Monday, the Federal Trade Commission accused Douglas Monahan and his Texas-based company iBackPack of operating “a deceptive crowdfunding scheme” worth over $US800,000.
According to the agency, Monahan told clients that the money would be used to develop high-tech consumer goods, but instead, he kept it to himself for personal use and never delivered the products as promised.
It all started in 2015 when Monahan first set out to raise money for iBackPack on the crowdfunding site Indiegogo. He promised “contributions would go to develop, produce, and distribute the product by March 2016,” a press release from the FTC said.
The high-tech backpacks, which were supposed to come equipped with batteries for charging laptops and phones, cables, and a Bluetooth speaker, had an anticipated delivery date of November 2016. The backpacks were never delivered.
Then, in March 2016 he used Kickstarter to raise money for a product caused iBackPack 2.0. A month later in April 2016, the campaign was ended after it raised over $US76,000, according to the FTC.
Neither backpack was ever produced.
At the same time, Monahan was using IndieGoGo to raise money for two separate products: the MOJO shoulder bag, which had many of the same capabilities as the iBackPack, and the POW smart cable, advertised as a magnetic USB cable system. Those campaigns raised $US11,000 in total, according to the FTC.
According to the FTC, Monohan told customers that products were “done/finished/shipped over with” or “on their way here,” when he knew they were not. Additionally, the agency accused Monohan of using the crowdfunded money for marketing efforts or to try to raise more money.
“If you raise money by crowdfunding, you don’t have to guarantee that your idea will work,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said in the press release. “But you do have to use the money to work on your idea – or expect to hear from the FTC.”
After a unanimous 5-0 vote by the FTC commission to submit a complaint, the case will be decided in court.
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