Meet the Man Being Sued By the FTC Over His Kickstarter Campaign for a High-Tech Backpack (theverge.com) 100
The Verge takes a 5,000-word look at a Kickstarter campaign "that raised more than half a million dollars, only to never ship and leave behind thousands of angry backers."
"The difference in this story, however, is that for only the second time, the Federal Trade Commission is coming for the creator." The agency claims Doug Monahan took his backpack funds and spent them on "personal expenses," including bitcoin purchases, ATM withdrawals, and credit card debt. The agency says he threatened backers who pursued him for their bags. The state of Texas is suing him, too. A lot of people want a piece of Monahan, but he's not going down without a fight. He's serving as his own lawyer to dispute the claims in court, and he invited me down to Texas to clear his name and reputation...
He sold iBackpack as a high-tech wonder that would "revolutionize" backpacks and improve people's lives, whether they're eight or 80. On Indiegogo in 2015 and again on Kickstarter in 2016, Monahan advertised the backpack as the bag of people's dreams: it'd feature more than 50 pockets, include multiple external battery packs, RFID-blocking pouches, a precipitation hood, a USB hub, charging cables, a Bluetooth speaker, and a mobile hotspot for a portable Wi-Fi connection. That's a lot of stuff in one bag that you could seemingly be talked into believing is useful...
He got addicted to pain pills, too. At the same time, the batteries that were supposed to go in the bag represented a liability. The iBackpack drama occurred around the same time that Samsung Galaxy Note 7 batteries started catching fire, and he didn't feel comfortable shipping lithium-ion batteries. Someone could have died, he says.... Monahan says they just don't understand him or crowdfunding, in general. He's not a bad guy, he says. It's just that businesses fail sometimes, which is what he invited me to Texas to prove.
Poking at Monahan's past, however, suggests this isn't a man with a one-time flub, but rather someone with a trail of failures. Is he a con-artist? An irresponsible businessman? Does the difference even matter?
The Verge also investigates a claim that the whole backpack idea was stolen from another company -- and talks to a former employee who says their manager at Monahan's company was a 14-year-old.
And at one point, Monahan "essentially crank calls the FTC's lawyers with me in the room."
"The difference in this story, however, is that for only the second time, the Federal Trade Commission is coming for the creator." The agency claims Doug Monahan took his backpack funds and spent them on "personal expenses," including bitcoin purchases, ATM withdrawals, and credit card debt. The agency says he threatened backers who pursued him for their bags. The state of Texas is suing him, too. A lot of people want a piece of Monahan, but he's not going down without a fight. He's serving as his own lawyer to dispute the claims in court, and he invited me down to Texas to clear his name and reputation...
He sold iBackpack as a high-tech wonder that would "revolutionize" backpacks and improve people's lives, whether they're eight or 80. On Indiegogo in 2015 and again on Kickstarter in 2016, Monahan advertised the backpack as the bag of people's dreams: it'd feature more than 50 pockets, include multiple external battery packs, RFID-blocking pouches, a precipitation hood, a USB hub, charging cables, a Bluetooth speaker, and a mobile hotspot for a portable Wi-Fi connection. That's a lot of stuff in one bag that you could seemingly be talked into believing is useful...
He got addicted to pain pills, too. At the same time, the batteries that were supposed to go in the bag represented a liability. The iBackpack drama occurred around the same time that Samsung Galaxy Note 7 batteries started catching fire, and he didn't feel comfortable shipping lithium-ion batteries. Someone could have died, he says.... Monahan says they just don't understand him or crowdfunding, in general. He's not a bad guy, he says. It's just that businesses fail sometimes, which is what he invited me to Texas to prove.
Poking at Monahan's past, however, suggests this isn't a man with a one-time flub, but rather someone with a trail of failures. Is he a con-artist? An irresponsible businessman? Does the difference even matter?
The Verge also investigates a claim that the whole backpack idea was stolen from another company -- and talks to a former employee who says their manager at Monahan's company was a 14-year-old.
And at one point, Monahan "essentially crank calls the FTC's lawyers with me in the room."
Representing himself (Score:3)
He's either a genius or a madman. My money's on the latter.
I don't bet money I can't afford to lose. Two Guys Space Adventure, anyone?
Re: Representing himself (Score:4, Informative)
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"Representing yourself in court is something you can do,"
So is a physician treating his own illness, both are insane. And, if it becomes a criminal matter, no judge will want to allow him pro se (without a member of the bar by his side) it's an open door for appeal.
And seriously, a civil case pro se followed by federal criminal charges... lunch meat for the prosecution.
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If he already spent the money, then it is probably his only choice.
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Indeed. A lawyer might notice that (1) he seems to be someone who will not pay his bills, win or lose, and (2) he seems like someone who might lie under oath. Both are reasons a lawyer might decide to not accept his case.
Re: Representing himself (Score:5, Insightful)
The issue is the law doesn't care who's "right". It cares who is following the law best.
He'll argue his point. He won't have a dispassionate view that lets him argue the law impartially, as the other side will be doing. The other side will dispassionately argue the law, and make their case. He will be so caught up in arguing his "view" he won't be arguing the law, even if he is on the right side of the law. (and given the facts made public, he's on the wrong side of the law)
Not even a competent lawyer will represent themselves, for that reason. Being close to it compromises one's judgement. For the rest of is, he's probably D-K-ing himself to believe he can mount a passable defense.
He might be able to keep up with the court filings to get himself into court, but he'd never be able to mount a passable defense in court. At best, he can make it look like he might mount a passable defense, and the prosecution will offer him a favorable plea.
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The other side will dispassionately argue the law, and make their case
You should sit in a civil court sometime during hearing. You'd be surprised how impassioned lawyers can get while defending minute arcana of things like tax law.
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Good lawyers know that emotion can be effective in emphasizing a point. It is not lawyers do not get this wrong, or get too personal involved at times, but if they seem impassioned about something dry like tax law it is likely a calculated gambit -- it is a message to the judge "oh, don't get distracted by the other side's less important points, MY point here is what really matters".
Re: Representing himself (Score:3)
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usual huckster. (Score:2)
Look, it's just the same as the bethesda vp. "Lol we don't need to deliver the product, it's just business". also if he was scared of shipping lithium ion batteries, why did he design a backpack and sell it as safe with them. surely he must have known that if he wasn't just throwing shit together for a prototype to cash money out of people? dude just straight up used the money and lied before that about how much money the product would need(because he didn't account paying shedloads of money to himself in
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Indeed.
There is a reason for the saying "A lawyer who represents themself has a fool for a client".
WTF (Score:4, Insightful)
Re:WTF (Score:5, Insightful)
You fail to notice who the majority of the people on the internet are these days.
It's not 1995 anymore. You can't e-mail a physicist and get a reply. Woz doesn't hang out on the net anymore.
Anyone with a phone gets on the net. And many of them can't be trusted with a can opener.
But... someone who is mildly intelligent can pack a backpack with a bunch of USB cables and convince a bunch of people it's a "tech revolution".
Re:WTF (Score:4, Funny)
"pack a backpack with a bunch of USB cables and convince a bunch of people it's a "tech revolution"."
Dude.. it had BlueTooth.. everyone know BlueTooth makes everything cool. Just think.. BlueTooth.. jeeze I want one now!
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Dude.. it had BlueTooth.. everyone know BlueTooth makes everything cool. Just think.. BlueTooth.. jeeze I want one now!
I'm holding out for release 2.0 with....Wait for it...Blockchain! "Now how much would you pay!?"
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Re:WTF (Score:5, Funny)
He got addicted to pain pills, too. At the same time, the batteries that were supposed to go in the bag represented a liability. The iBackpack drama occurred around the same time that Samsung Galaxy Note 7 batteries started catching fire, and he didn't feel comfortable shipping lithium-ion batteries. Someone could have died, he says
I ran out of gas! I got a flat tire! I didn't have change for cab fare! I lost my tux at the cleaners! I locked my keys in the car! An old friend came in from out of town! Someone stole my car! There was an earthquake! A terrible flood! Locusts! IT WASN'T MY FAULT, I SWEAR TO GOD! [youtube.com]
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But... someone who is mildly intelligent can pack a backpack with a bunch of USB cables and convince a bunch of people it's a "tech revolution".
PT Barnum validated how often suckers are born well over 150 years ago. No "tech revolution" required; just plain old fashioned human ignorance.
Same Stupidity, Different Century.
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No, it comes with a little orange fan as well (to keep you cool) so it's more than a cluster fuck of cables. It's a cluster fuck of any stupid shit apparently available. It'd be cool if it had LEDs though with an app to change their colour.
Re:WTF (Score:4, Informative)
Who the fuck would give somebody money to buy a backpack they could just assemble themselves? Especially since it's just a cluster fuck of cables.
This is exactly what I thought.
Just buy a decent backpack and modify it with *maybe* $100 worth of stuff. You'd end up with a hell of a lot better backpack for a hell of a lot less money.
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Indeed. And here we have the people that fund such a thing: People that lack contact to reality. Makes them easy targets and yes, this pretty clearly was fraud even if the perpetrator seems to be more a person living outside of reality than a hardened criminal.
Now, I do not think there is actually much fraud on Kickstarter and the like. Almost all funded but failed projects will be people that are in over their heads or that did run into problems that were hard to predict. In all of those cases, the people
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Looking at the Kickstarter [kickstarter.com] page for it you can see it's just a basic backpack you would buy off AliExpress. The battery pack is another AliExpress special, they offer a service to put your own logo on it if that's not just a photoshop job.
The images on there are clearly fake. Like the main image of the backpack has lines pointing to things that aren't in the image. He couldn't even be bothered to cobble together a prototype from AliExpress parts.
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To be honest, most Kickstarter projects seem kinda dodgy to me.
I see something and go, "Hmmm, that looks interesting" and then I take a closer look and realize it's an super-insulated coffee cup or a new kind of twist-tie.
Kickstarter is like gambling- never play with money that you can't afford to lose.
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Who the fuck would give somebody money to buy a backpack they could just assemble themselves?
Who would give anyone money for any product they can assemble themselves? The answer is most people, because the cost of buying a pre-assembled mass produced item is normally well below the cost of assembling something yourself, not to mention normally of better fit and finish as well.
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"for machines and a workbench"
Did you bootstrap the machines from iron ore stones and trees?
"Making your own bread, beer, or yogurt is pretty easy too, I even have the equipment for each"
Did you make that equipment or did you buy it?
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bootstrapping (Score:2)
I read Dave Gingery's series, "Build your own machine shop from scrap". It's well worth a read - because when it comes down to it, a machinist with a file and a foundry could reproduce the entire progress of the industrial revolution in a matter of weeks. It's not so much a matter of ability as it is the knowledge of what works, and what doesn't. And if you had that knowledge, you could indeed bootstrap society from the stone age, and yes, by yourself.
And if there was someone with you who understood
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Well, what else is a man to do while the crops grow throughout the summer? Go fight the Athenians?! Oh, wait - you need iron for that!
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Did you make that equipment or did you buy it?
Is that a real poncho, or a Sears poncho?
Kickstarter is like gambling .... (Score:5, Interesting)
People promise stuff you have NO idea if they're really going to make the effort to finish, and you hand over money on the gamble it'll pay off.
I've seen some great ideas proposed as Kickstarters, but I refuse to pay for something that's not finished in at least a version 1.0 obtainable form.
I noticed several stores opening in shopping malls I've been in that featured nothing but products offered by campaigns like these that made it to production. Seems like a way better idea to shop there, so you can see lots of cool concepts and actually demo them and take one home if you want to buy it.
Re:Kickstarter is like gambling .... (Score:4)
Kickstarter is essentially micro-investing, not “purchasing something.” The “gift” you get out of it (if you are lucky) is a miserable return on investment, so it had better be good, or a cause you feel is worthy of a non tax-deductible donation.
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Actually, with a bit of that rare "common sense", Kickstarter is a lot better than gambling. From my experience successful projects deliver at around half of the cost you would otherwise have had to pay. Now, with that common sense in effect, you should see roughly half of the projects you fund succeed. Hence, in the end, you pay about the same and you get some things you could not have gotten otherwise.
Yes, it is easy to get carried away. I have personally funded one project that later massively under-deli
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I've backed a couple of Kickstarter campaigns that have both come to fruition. I don't mind risking a few bucks for something I actually want and that seems like it has a realistic prospect of working out.
First was the game Road Redemption, a spiritual successor to Road Rash. They took an extra year to finish it than they planned but it's done now and good fun.
Second was Pluggy Lock, a little widget that goes in your phone's headphone jack to add a loop where you can attach a lanyard or whatever. I like to
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Let me open by saying that I'm no fan of Trump, but declaring a business bankrupt often DOES make good business sense. That he's taking advantage of that fact in a way that he profits from at our expense is a sign of bad morality, and bad ethics, not bad business sense or lack of intelligence.
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That he's taking advantage of that fact in a way that he profits from at our expense is a sign of bad morality, and bad ethics, not bad business sense or lack of intelligence.
I want to expand upon this some. There's multiple different chapters of bankruptcy, especially when it comes to businesses. To my knowledge, Trump has always had his businesses declare chapter 11, which is "reorganization", as opposed to chapter 7, liquidation, which is what most people think of when they hear "declared bankruptcy".
In a chapter 11 bankruptcy all the creditors still get paid. They might have to accept changes in repayment timelines or interest rates, but they still get paid back. In pers
The FTC needs to go after Kickstarter, too. (Score:2)
Too often, these "campaigns" and Kickstarter use the trade dress of a store (forget where I saw that but the person who wrote that nailed the idea) while claiming to not be a store. Kickstarter passes the duck test for a store, except they take their percentage from blatant scammers and then wash their hands of the situation, saying that the issue is between the backers and the "maker."
Kickstarter is knowingly facilitating fraud and it will be entertaining to see what a functioning consumer protection appar
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Actually, no. If you have some of that rare quality "common sense", Kickstarter is an investment that is paying off about half of the time. And those time you get things that would not have existed otherwise. Hence no different from buying regular stuff, except it would not have existed without Kickstarter. Now, if you support clearly unrealistic projects and projects that are just plain dumb, you will get much less out of it as the rate of failures will be much higher. A peculiar risk is projects that are
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Clearly you have had good luck, but there are several campaigns where the funds have been delivered and the makers have ghosted. Victim-blaming plus all the legalese and disclaimers don't change the fact that Kickstarter presents itself as a store in all but the fine print and facilitates (and profits from) blatant fraud.
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I disagree on the luck part. I do not think I have had "luck" at all. I fully expected about half of my investments to not pan out and about that level has happened. I have had none that delivered nothing, but I have had some very substandard results. As to results, if the makers made a serious attempt but failed, that is not fraud. If they did not try at all and did not plan to, that is something different, but the rate of that seems to be no higher on Kickstarter than in any other industry.
Now, saying tha
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Wow, just wow. I'm truly sorry for you and glad most of society is not composed of people like yourself.
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Many of the worst-treated victims of unethical behavior in our world tend not to speak up. The ones crying loudest are often being irrational or even deceptive. Pay attention to clear facts being spoken simply. As soon as someone starts appealing to your emotions, the probability goes way up that they'
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Really? Using words like "repulsive," "self-indulgent," and "parasitic" to describe fraud victims is reasonable? Not in my world view.
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Oh, yes, you would. "Professional victim" drips from your posting. Whenever something bad happens to you, it is, of course, never your fault and you never need to change anything on your side. It is the world treating you unfairly!
Incidentally, if you have at least some actual reading skills, you may want to re-read what I wrote. I did comment on the "victim stance", not on people being fraud victims in general.
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Kickstarter fights the reporting of the number of fraudulent projects (they "admit" about 1/3 fully fund, and 12% get zero funding, they don't even entertain the notion that something could fund and not ship, as far as I can tell). Does
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Nope. Maybe do some minimal research as to the conditions of the typical crowd-funding system before claiming such a complete falsehood? Some basic reading skills required, in particular seeing what the words really say and not what you wish them to say, are required for that though.
What you buy is a credible attempt to create the product and, contingent to that working and the manufacturing cost not being too high, you are owed a copy of that product. You are only defrauded if the credible attempt is not m
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Maybe do some minimal research as to the conditions of the typical crowd-funding system before claiming such a complete falsehood?
Maybe you could use a quote next time to indicate which statement you take offense to.
Everything I've said is true, and nothing you've said contradicts it. You are just arguing that asking what the fraud rate is is somehow offensive. That's insane.
Kickstarter refusing to freely give that number should be considered fraud.
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He's victim-blaming and probably also believes in a hyper-libertarian caveat emptor dystopia where deceit and fraud are widely tolerated and chalked up to the victims not having done their due diligence. Maybe a Kickstarter employee also?
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Ah, yes, in your world it is of course never your fault. And now you even come up with conspiracies to justify that self-indulgent attitude? Fascinating!
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You are only defrauded if the credible attempt is not made.
Kickstarter is also committing fraud by failing to release the numbers that fund and don't ship.
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You should read up on the definition of fraud. It is not what you think it is. You posturing is just silly.
Here is a hint: If Kickstarter were to publish fake numbers, that would be fraud.
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They don't publish it. But I'm sure even the flagrant Kickstarter apologists in this thread have an idea it's a good bit more than zero.
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Sure. But they are under no obligation to publish these numbers. Incidentally, what you call a "Kickstarter apologist" is usually just a person that understands the business model used. I personally expect something like 50% failures overall by funding volume and more by number of projects, that is when projects that under-deliver are included. Nobody with two brain cells to rub together expects a minor or insignificant failure rate with this business model. But apparently, the business model (simple though
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But they are under no obligation to publish these numbers.
A mobster is under no obligation to publish the number of people they are shaking down.
If someone won't publish a number, assume they are hiding fraud. Works for Kickstarter. Works for the President.
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Bullshit. Most companies only publish the numbers they are legally required to publish. It means exactly nothing.
It's all in the video (Score:2)
I love those zoomed in shots of the backpack, just goes to show that people will buy anything. I wonder if they still would have funded the backpack if the 70 year old drunk guy was introduced as the director of the company.
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$76,000 pledged with only 252 backers. Someone paid a lot for this.
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$76,000 pledged with only 252 backers. Someone paid a lot for this.
Some people have money but no sense. For some others, putting down $1000 is only petty cash and they may do it on a very small chance of success.
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Probably agents of the "creator" kicked in some big pledges to make sure the scam got over the funding threshold (technically against the rules but KS seems to be deliberately blind to scams of all sorts so long as they get their cut). If a project doesn't reach the funding threshold, there's no payout for the scammer.
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I believe on the order of 5-10% of gross.
Damn, it's Proust! (Score:1)
What a scumbag (Score:1)
Kickstarter is just a casino (Score:2)
A lot of enternpeurs are slightly unhinged, they have to be in order to survive and get their ideas to market. We only ever see the real success stories when they manage to find people with feet firmly on the ground who make their crackpot ideas actually work. For every Steve Jobs there's a million "already rans" who've tried and failed with a thousands ideas.
I'm sure the guy's idea is sound but he's simply too scatty to be trusted to run a business, fair chance that if he had some sensible people in on his
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With a bit of common sense and restraint, Kickstarter is actually a pretty nice thing. Sure, black comes up and you lose all, bit red comes up and you get something you really wanted and that would not exist otherwise. Of course, without that common sense and restraint you can lose a lot of money and get nothing. There are lots and lot of other ways to lose a lot of money when you are short of common sense and restraint though, Kickstarter is not really any worse than those and a lot better as it very clear
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Casinos (and their less stigmatized counterpart, stock exchanges) are highly regulated. Kickstarter and other "crowd-funding" "not stores" should be too, if they're to be allowed to continue to exist in their current form.
Sufficiently advanced incompetence ... (Score:2)
... is indistinguishable from actual malice.
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Except that often times (possibly not in this case), scammers take advantage of that razor as a cover for actual malice. Kickstarter is littered with exit scams where "backers'" money was taken and communication ceased completely. It's only a matter of time before credit card issuers, state attorneys-general and/or regulators bring the hammer down.
Bulletproof, hidden comparments, TSA friendly (Score:3)
Man, this bag had everything except an endorsement by DrDre.
Crowdfunding (Score:2)
I'm one of the idiots who backed him ;-) (Score:5, Informative)
I am one of his backers (on Indiegogo) and very much in favor of the FTC suing the hell out of him. I do not resent failing, but he was actively and continuously lying to his backers. Further I have the strong suspicion he gave or sold the data on his backers to third parties (who also tried to scam those).
There were warning signs that I overlooked. But once I got suspicious I really tried hard to get Indiegogo involved to prevent him from receiving any more money from others. There complete lack of interest of Indiegogo is one of the reasons I withdrew from crowdfunding.
Remark: I backed about 100 projects on Indiegogo and Kickstarter. Only less than a quarter of them failed to deliver, but in most cases the project creator tried really, really hard to deliver. In such cases I regard the loss of my money to be part of the game and I do not resent it.
In three cases I would rate the failed project to be a case of fraud. This was one of them.
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I'm not ashamed.
Today that backpack may look like "nothing special". But if you see it through the 2015-eyes, the view might differ.
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The problem with Kickstarter and Indiegogo is that there's no real way to distinguish between "tried and failed" and an exit scam. And once the platforms have taken their commission, they have no monetary incentive to care.
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IMHO you can distinguish it quite well. Most creators communicate a lot and are (even when failing) very transparent. Usually they do not lie and you can see them trying.
But concerning the lack of incentive for Kickstarter and Indiegogo to curb the fraud you're right. That explains but does not excuse their lackluster performance in that regard. So I quite crowdfunding instead...
P.S. I still do Patreon, but that is a rather different approach.
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Right - the frauds are obvious in retrospect, after most people will have given up on fighting for what is usually a relatively small amount of money. IMO Kickstarter should be required to vet creators, release funds in phases and monitor manufacturing. They should also not allow copy that uses verbiage like "order," "early-bird discount," etc.. while also claiming to be "not a store." Right now, they're not adding much value for "backers" and using the "just a platform" excuse to dodge liability. It won't
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Sorry but you're going to have to forfeit that low UID.
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It is not that low, I have friends with 4 digit ones...
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Never thought I'd see the day that five digit user IDs inspired envy :).
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I've always taken the view that if I'm giving money to someone for them to invest in a product, I want an equity stake.
So indiegogo and kickstarter are non-starters for me. If their products are successful I can buy one from their second run.
Paying premium prices for a product concept that may never arrive always did feel a poor use of funds.
Kickstarter is for people who know what they do (Score:2)
If you want to back something, first of all ask yourself whether what they promise is at least possible. I have seen so many, many things that are simply and plainly physically impossible or at the very least so unfeasible that it is not sensible to do it. And these projects get funding.
A fool and his money will quickly part ways. No way is quicker to accomplish that goal than Kickstarter and the likes.
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Step 1: check to see if there is a thunderf00t video debunking the project.
Embezzlement a recurring problem for crowdsourcing (Score:2)
This is not the first case of someone taking money for one purpose and using it for another, and will certainly not be the last. Crowdfunding platforms seem to have a real problem with simply turning the funds over and washing their hands of the matter, leaving the funders with little recourse. I find it hard to believe that they don't stagger payments on milestones in order to make sure this sort of thing doesn't happen, or find some other way to attach liability until the requesting party has followed thr
Suckers (Score:1)
Used to be there was a sucker born every minute. Now with new technology and improvements we're down to a new sucker born every 5 seconds. Still room for improvement. We can make 1 second per sucker!