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If you give $700 to a company that promises to deliver a scooter, and they spend that money on advertising, that’s fraud. They have no plausible argument that

If you give $700 to a company that promises to deliver a scooter, and they spend that money on advertising, that’s fraud. They have no plausible argument that they didn’t know they couldn’t deliver or refund customers after they started spending pre-order funds. I hope customers get successful chargebacks and there’s a class action lawsuit. This wasn’t a crowdfunding campaign. Consumers were lied to, and the law should make clear that this is unacceptable business practice.

Someone1234 7y ago
A class action lawsuit against who? You cannot sue a company that no longer exists. It is unlikely consumers would be able to defeat limited liability, particularly with the argument that "the company should have allocated resources differently."
- richardwhiuk 7y ago
  If you could prove deliberate fraud, which seems unlikely, then you could probably pierce the limited liability shield. Seems unlikely though.
  - Enginerrrd 7y ago
    It might not be that unlikely... For example, it's possible they don't have the advertising invoices to back up the claim that that's where the money went. It is, however, very unlikely that anyone ever gets their money back.
  - paulddraper 7y ago
    Yes, LLC don't protect from many criminal charges such as fraud. It would indeed be difficult to prove this was deceptive and not just really poor, even idiotic, business planning.
    - kjs3 7y ago
      Indeed. Sadly, stupid isn't (usually) criminal.
- toomuchtodo 7y ago
  You sue the corporate officers, and it's up to them to find someone to defend them in court.
  - Someone1234 7y ago
    You can quite literally sue anyone for anything. But lawsuits aren't free, and the law isn't on the claimants side here, so they'd lose. So, sure, sue away it is just even more money lost and likely still no scooter or refund to show for it.
    - toomuchtodo 7y ago
      > the law isn't on the claimants side here, so they'd lose. That's up to a jury, not an online forum.
      - Someone1234 7y ago
        It would never go to a jury. The claims of fraud to penetrate limited liability would be thrown out by the judge for having no legal grounding, then they would be stuck suing a limited liability company with no money.
      - filmgirlcw 7y ago
        But the broader point about lawsuits not being free is valid. Because in addition to filing fees, you need to pay lawyers to do this. And I am not a lawyer, but I don't know many good lawyers would would take on a case to go after a bankrupt company that has no assets. And even then, those good lawyers are going to want a retainer and multi-hundred dollar an hour fees to do the work, so sure. File a lawsuit. Spend tens of thousands of dollars to get a judgment that the defendant can't pay. What good does that do? Like, to be clear, if you have more money than God and want to spend time making a point, I'm all for it. You do you. But most people don't have that much money or time to piss away when there is nothing to be gained from the exercise.
        toomuchtodo 7y ago
- bransonf 7y ago
  An LLC does not protect one in cases of fraud. IANAL, but I believe the practices of Unicorn may constitute fraud under a legal definition. In such a case, Nick Evans would be personally liable for damages.
  - Someone1234 7y ago
    Sure, but nobody has given an example that would be considered fraud. "They spent too much on marketing and not enough fulfilling orders" isn't in itself fraud, just a badly run business that is now bankrupt as a direct result. If the bar for fraud was set that low, I bet half of failed startups would be considered "fraudulent." More than half if you look at restaurants. > Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Unless you have some damning email or other disclosure you'd never be able to prove that they knowingly sold scooters they never intended to fulfil, therefore fraud is out. In fact all the evidence seems to indicate the opposite, that their long term goal was to make this a successful business and grow until the money ran out.
    - bransonf 7y ago
      On 11/13 they promised to be preparing to start deliveries on 12/15. If at this point they had not made an effort to reach this goal (placing an order with the manufacturer for example), that is a misrepresentation of fact. Fraud doesn’t imply malice. They could have jumped the gun on announcing they were preparing to deliver, but doing so would still constitute fraud, especially if this drove an increase in orders.
      - filmgirlcw 7y ago
        If they were still accepting new orders on 11/13 under those promises, that might be fraud. But any of the older backers wouldn't fall under that. You would have to prove that when the statements to prepare delivery for 12/15 were made, the company had absolute knowledge that no future funding was going to come and that it was guaranteed that they were lying. If the company was in talks with other investors and thought it might be able to raise in order to ship what was necessary, that's not fraud. That's bad business and everyone should be weary/stay the hell away from any future venture from this place, but that isn't fraud.
flyGuyOnTheSly 7y ago
You're not wrong, you're an idealist, which typically are very closely intertwined when it comes to reality. If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Which is to say, you paid for a pricey digital lottery ticket with a very low potential ROI. It's a crying shame, absolutely. But it's nothing to burden the court systems with.
- dmix 7y ago
  Indeed, how many Kickstarter projects will it take to convince people preordering on an unsure thing is a gamble and basically an investment in an idea that interests you. Tons of billion dollar projects, let alone those with only a few million, have been delayed for years, changed half way through, or have died before finishing. The failure rates for new businesses is pretty high, 50% in the first year. One could question if its moral to take early preorders without some form of insurance but at the same time a ton of good things have come about using this process and proper communication by the company/purchasing platform can mitigate most of these issues. Plus it’s pretty rare for people to being giving hundreds of dollars, let alone almost $1000, to an unproven product so it’s probably best not to judge based on the extremes. Obviously if shady stuff is going on and there’s some evidence the company didn’t meaningfully try to accomplish the goals for which it raised money and misused company funds for personal benefit then there’s a serious problem. There's plenty of laws in place for that already.
  - braythwayt 7y ago
    > preordering on an unsure thing is a gamble Even though you are trying to warn people, you've accidentally fallen into Kickstarter's "dark pattern in broad daylight" by using the word "preordering." Kickstarter donations (I consider it a charity) are not pre-orders. If I preorder a book on Amazon and it is late, tough for me. If the publisher closes down, Amazon gives me my money back. Kickstarter donations, on the other hand, don't even have that recourse. We're giving them money out of the goodness of our hearts, and if everything works out for them and they feel like giving us our reward, we receive a nice "thank you gift." Kickstarter transactions are charitable donations. We don't get a tax receipt, but if things line up, we do get a reward. If we think of it as charity without the tax benefits, we won't go wrong. But the moment words like "preorder" or "purchase" enter into the conversation, we've fallen into the trap of thinking that we're consumers purchasing a good or service.
maximente 7y ago
there (allegedly) isn't any $ left to gain for a class of plaintiffs from the defendant, so a class action lawsuit is pointless
- EpicEng 7y ago
  If it were found to be fraud then you would be going after the officers of the company directly.
crystaln 7y ago
Not fraud just bad business. If they spent the money in good faith expecting to make a profit, it is just bad business.
koolba 7y ago
Why would anyone do this when you can get what seems like the same scooter for $300? Isn’t this the same as those Xaiomi (spelling?) scooters I keep seeing for sale?
- djshelleyshell 7y ago
  I liked the scooter. I liked the bells and whistles. Just because the scooter is more expensive than another, doesn’t mean I should be screwed.
justaguyhere 7y ago
It might be better to have higher/stricter standards than suing them after the collapse. For example, some rules around how much of the raised money they are allowed to spend on advertising, forcing them to post monthly financial statements (so any money mismanagement is caught early) etc - something like that. This might improve the quality of companies attempting such projects. Litigation is expensive - plus, 150K isn't that big of an amount in the larger scheme of things. This isn't Theranos level fraud, assuming it was a fraud and not just incompetence/inexperience
just_myles 7y ago
You're not wrong. They should have focused those monies on building the actual product first and then shipping it. At that point, once the kickstarter units are built and shipped, grow your business accordingly. To have nothing to show for the efforts is deplorable.
deleted 7y ago
[deleted]

Someone1234 7y ago

A class action lawsuit against who? You cannot sue a company that no longer exists. It is unlikely consumers would be able to defeat limited liability, particularly with the argument that "the company should have allocated resources differently."

richardwhiuk 7y ago
If you could prove deliberate fraud, which seems unlikely, then you could probably pierce the limited liability shield. Seems unlikely though.
- Enginerrrd 7y ago
  It might not be that unlikely... For example, it's possible they don't have the advertising invoices to back up the claim that that's where the money went. It is, however, very unlikely that anyone ever gets their money back.
- paulddraper 7y ago
  Yes, LLC don't protect from many criminal charges such as fraud. It would indeed be difficult to prove this was deceptive and not just really poor, even idiotic, business planning.
  - kjs3 7y ago
    Indeed. Sadly, stupid isn't (usually) criminal.
toomuchtodo 7y ago
You sue the corporate officers, and it's up to them to find someone to defend them in court.
- Someone1234 7y ago
  You can quite literally sue anyone for anything. But lawsuits aren't free, and the law isn't on the claimants side here, so they'd lose. So, sure, sue away it is just even more money lost and likely still no scooter or refund to show for it.
  - toomuchtodo 7y ago
    > the law isn't on the claimants side here, so they'd lose. That's up to a jury, not an online forum.
    - Someone1234 7y ago
      It would never go to a jury. The claims of fraud to penetrate limited liability would be thrown out by the judge for having no legal grounding, then they would be stuck suing a limited liability company with no money.
    - filmgirlcw 7y ago
      But the broader point about lawsuits not being free is valid. Because in addition to filing fees, you need to pay lawyers to do this. And I am not a lawyer, but I don't know many good lawyers would would take on a case to go after a bankrupt company that has no assets. And even then, those good lawyers are going to want a retainer and multi-hundred dollar an hour fees to do the work, so sure. File a lawsuit. Spend tens of thousands of dollars to get a judgment that the defendant can't pay. What good does that do? Like, to be clear, if you have more money than God and want to spend time making a point, I'm all for it. You do you. But most people don't have that much money or time to piss away when there is nothing to be gained from the exercise.
      - toomuchtodo 7y ago
bransonf 7y ago
An LLC does not protect one in cases of fraud. IANAL, but I believe the practices of Unicorn may constitute fraud under a legal definition. In such a case, Nick Evans would be personally liable for damages.
- Someone1234 7y ago
  Sure, but nobody has given an example that would be considered fraud. "They spent too much on marketing and not enough fulfilling orders" isn't in itself fraud, just a badly run business that is now bankrupt as a direct result. If the bar for fraud was set that low, I bet half of failed startups would be considered "fraudulent." More than half if you look at restaurants. > Fraud is generally defined in the law as an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act, and upon which the other person relies with resulting injury or damage. Unless you have some damning email or other disclosure you'd never be able to prove that they knowingly sold scooters they never intended to fulfil, therefore fraud is out. In fact all the evidence seems to indicate the opposite, that their long term goal was to make this a successful business and grow until the money ran out.
  - bransonf 7y ago
    On 11/13 they promised to be preparing to start deliveries on 12/15. If at this point they had not made an effort to reach this goal (placing an order with the manufacturer for example), that is a misrepresentation of fact. Fraud doesn’t imply malice. They could have jumped the gun on announcing they were preparing to deliver, but doing so would still constitute fraud, especially if this drove an increase in orders.
    - filmgirlcw 7y ago
      If they were still accepting new orders on 11/13 under those promises, that might be fraud. But any of the older backers wouldn't fall under that. You would have to prove that when the statements to prepare delivery for 12/15 were made, the company had absolute knowledge that no future funding was going to come and that it was guaranteed that they were lying. If the company was in talks with other investors and thought it might be able to raise in order to ship what was necessary, that's not fraud. That's bad business and everyone should be weary/stay the hell away from any future venture from this place, but that isn't fraud.

flyGuyOnTheSly 7y ago

You're not wrong, you're an idealist, which typically are very closely intertwined when it comes to reality. If you gave $700 to a company who promised to deliver you a scooter a few years down the line if all of the dominoes fell exactly as planned... I would argue that you got what you paid for even if it amounts to nothing tangible in the long run. Which is to say, you paid for a pricey digital lottery ticket with a very low potential ROI. It's a crying shame, absolutely. But it's nothing to burden the court systems with.

dmix 7y ago
Indeed, how many Kickstarter projects will it take to convince people preordering on an unsure thing is a gamble and basically an investment in an idea that interests you. Tons of billion dollar projects, let alone those with only a few million, have been delayed for years, changed half way through, or have died before finishing. The failure rates for new businesses is pretty high, 50% in the first year. One could question if its moral to take early preorders without some form of insurance but at the same time a ton of good things have come about using this process and proper communication by the company/purchasing platform can mitigate most of these issues. Plus it’s pretty rare for people to being giving hundreds of dollars, let alone almost $1000, to an unproven product so it’s probably best not to judge based on the extremes. Obviously if shady stuff is going on and there’s some evidence the company didn’t meaningfully try to accomplish the goals for which it raised money and misused company funds for personal benefit then there’s a serious problem. There's plenty of laws in place for that already.
- braythwayt 7y ago
  > preordering on an unsure thing is a gamble Even though you are trying to warn people, you've accidentally fallen into Kickstarter's "dark pattern in broad daylight" by using the word "preordering." Kickstarter donations (I consider it a charity) are not pre-orders. If I preorder a book on Amazon and it is late, tough for me. If the publisher closes down, Amazon gives me my money back. Kickstarter donations, on the other hand, don't even have that recourse. We're giving them money out of the goodness of our hearts, and if everything works out for them and they feel like giving us our reward, we receive a nice "thank you gift." Kickstarter transactions are charitable donations. We don't get a tax receipt, but if things line up, we do get a reward. If we think of it as charity without the tax benefits, we won't go wrong. But the moment words like "preorder" or "purchase" enter into the conversation, we've fallen into the trap of thinking that we're consumers purchasing a good or service.

maximente 7y ago

there (allegedly) isn't any $ left to gain for a class of plaintiffs from the defendant, so a class action lawsuit is pointless

EpicEng 7y ago
If it were found to be fraud then you would be going after the officers of the company directly.

crystaln 7y ago

Not fraud just bad business. If they spent the money in good faith expecting to make a profit, it is just bad business.

koolba 7y ago

Why would anyone do this when you can get what seems like the same scooter for $300? Isn’t this the same as those Xaiomi (spelling?) scooters I keep seeing for sale?

djshelleyshell 7y ago
I liked the scooter. I liked the bells and whistles. Just because the scooter is more expensive than another, doesn’t mean I should be screwed.

justaguyhere 7y ago

It might be better to have higher/stricter standards than suing them after the collapse. For example, some rules around how much of the raised money they are allowed to spend on advertising, forcing them to post monthly financial statements (so any money mismanagement is caught early) etc - something like that. This might improve the quality of companies attempting such projects. Litigation is expensive - plus, 150K isn't that big of an amount in the larger scheme of things. This isn't Theranos level fraud, assuming it was a fraud and not just incompetence/inexperience

just_myles 7y ago

You're not wrong. They should have focused those monies on building the actual product first and then shipping it. At that point, once the kickstarter units are built and shipped, grow your business accordingly. To have nothing to show for the efforts is deplorable.

deleted 7y ago

[deleted]