Was the Downfall of This Drone Maker Fraud or Crowdfunding Gone Wrong?

Do you know what crowdfunding is? It is the concept that a bunch of people on the internet can put their money behind a product, see it developed, and get to enjoy the finished product they paid for. It’s a type of investing, which means there is inherent risk involved. Sometimes the product you invest in doesn’t make it to the final stage, and investors lose their money, but is this what happened in the case of drone maker Lily?

Was It Fraud or Crowdfunding?

Millions of people watched an online pitch for the Lily personal drone and were stunned. This little device was touted as the next step in personal photography. It had simple controls, it could be programmed to do things, and it could even follow its owner around. There was only one problem. This miracle product didn’t exist.

The makers of Lily actually pieced their pitch trailer together using footage from a DJI Inspire drone and from shots taken on a GoPro camera. The company had not developed their own drone or the camera equipment the drone would use. Thousands paid the company in anticipation of the new drone device only to have their order delayed from February 2016 to late 2017, and authorities smelled something fishy.

When investigating Lily, authorities found e-mails from one of the company’s co-founders talking about misleading customers with video footage that wasn’t from their product. Authorities also wondered why Lily had setup preorders on its site instead of using a crowdfunder like Kickstarter or GoFundMe. It all came to a head when San Francisco’s DA filed a lawsuit against the company, accusing it of false advertising and unfair business practices.

The lawsuit has triggered a response from the previously silent company, which up to that point hadn’t really explained what was going on. It has now offered refunds to those who preordered the Lily drone, and the company plans to shut down. Lily also claims that it was planning these moves before the San Francisco DA filed his lawsuit, but happenstance had the two events occur in the same week.

Do you believe Lily? Should customers and investors who bought into the company also file lawsuits against this almost drone maker? The Macon product liability attorneys here at the McArthur Law Firm will keep an eye on this case. You can stay up-to-date with what we learn by following our blog, Facebook and Twitter.



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