Developers of a high-tech backpack are under fire from the US Federal Trade Commission for what the agency says were deceptive crowdfunding practices.
The FTC said in a release Monday that Douglas Monahan's company, iBackPack of Texas, LLC, raised $800,000 from consumers over four fundraisers. The agency filed a complaint Monday in the Southern District Court of Florida, alleging that iBackPack and Monahan used "a large share of the funds on various personal expenses." The money was meant for development, production and delivery of products, but the FTC said that to date no backpacks have been delivered.
"While hundreds of consumers have complained about the campaigns, defendants largely have ignored refund requests and then shut down the company, have transferred the remaining money to unrelated companies run by defendant Monahan, and have ceased communications with consumers," the complaint said.
Andrew Smith, Director of the FTC's Bureau of Consumer Protection, said those who raise money through crowdfunding don't have to guarantee their idea will work, but the funds have to be dedicated to work on the idea.
Monahan first sought funding for iBackPack in 2015. By November 2017, the crowdfunding campaign had raised $720,000, according to the FTC. The backpack had a distribution date of March 2016, which was missed, and Monahan began another fundraiser on Kickstarter. The second fundraiser ended in April 2016, garnering an additional $76,000. Around the same time, Monahan started two more campaigns on Indiegogo and raised $11,000, according to the FTC.
According to the Indiegogo campaign, the iBackPack would be able to hold "all your electronics" and would come with an optional built-in Wi-Fi connection and batteries "galore." The TSA-friendly pack, with a built-in rain hood and 30 compartments, would make sure all your electronics are charged.
Monahan didn't immediately respond to request for comment.
Originally published May 7.
Update, May 8: Adds our reaching out to Doug Monahan for comment.