Antitrust Law Daily FTC files suit alleging deceptive crowdfunding, false promises of high-tech backpacks
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Monday, May 6, 2019

FTC files suit alleging deceptive crowdfunding, false promises of high-tech backpacks

By Jeffrey May, J.D.

More than $800,000 was raised from consumers through four crowdfunding campaigns that allegedly misrepresented that funds would be used to develop an “iBackPack,” other tech accessories.

The FTC has charged Douglas Monahan, operating through his company, iBackPack of Texas, LLC, with operating a deceptive crowdfunding scheme, using two platforms, Indiegogo.com and Kickstarter.com. The agency filed a complaint in the federal district court in Galveston, Texas, on May 6, alleging that the defendants misrepresented to consumers that the contributed funds would be used primarily to develop, produce, complete, and deliver certain products, such as the backpack, which incorporated various technology features. However, according to the agency, the defendants used a large share of the funds on various personal expenses and continued soliciting consumers for additional funds. The FTC contended that the defendants have not provided a single completed product to any consumer who contributed to the campaigns. In addition to allegedly making misrepresentations to consumers, the FTC alleged that the defendants also made misrepresentations to the crowdfunding site staffs (FTC v. iBackPack of Texas, LLC, FTC File No.  172 3115, Case No. 3:19-cv-00160).

According to the FTC, the defendants claimed on Indiegogo back in 2015 that consumers who contributed $169 would get the iBackPack 1.0 Power Pack. After the delivery date came and went and no backpacks were supplied to contributors, the agency alleged, another campaign was launched on Kickstarter to produce and distribute the iBackPack 2.0. Consumers who pledged $299 on Kickstarter were promised a WiFi version of the backpack. The defendants purportedly told consumers they were “busy finalizing all the various components of the iBackPack” and even posted photos purporting to show the product being manufactured in China. The delivery dates were pushed back on multiple occasions, it was alleged. The agency offered similar stories for a "MOJO" shoulder bag and the POW Smart Cable, a magnetic USB cable system with various technology features.

The FTC is seeking injunctive relief to halt the challenged practices, as well as restitution and disgorgement.

Companies: iBackPack of Texas, LLC

MainStory: TopStory Advertising ConsumerProtection FederalTradeCommissionNews

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