This is how to easily lose your money to a crowdfunding fail (2019 update)

A Shark Tank and Crowdfunding fail?

There’s a fine line between a crowdfunding fail and a crowdfunding scam. The CoolPeds iBike crowdfunding campaign seems to have ridden fairly close to that line. And although the experienced investors on the ABC hit show “Shark Tank” declined to support Chan’s inventions, several of our readers without that level of business expertise say they got burned.

Now those “investors” want to know if they will ever receive the $500 CoolPeds electric iBike they believed they were purchasing.

Unfortunately, this situation points to a basic misunderstanding of what crowdfunding is and what it isn’t. If you choose to participate in a crowdfunding campaign, there is no guarantee you will receive anything in the end. And it’s vital to understand that concept before plunking down your cash.

What is crowdfunding?

First things first. In order to understand this case, you need to know the basic premise behind crowdfunding.

Crowdfunding is a relatively new phenomenon in which entrepreneurs ask for backers to fund their ideas. Various crowdfunding platforms such as Indiegogo, Kickstarter and Circle Up host these crowdfunding campaigns. Investors donate money to the idea in hopes that it will come to fruition.

Crowdfunding can be a great way for a struggling innovator to get their product’s creation funded.

However, as one could guess, not all of these crowdfunding campaigns end in a successful product. And in some cases, the contributors lose their money and receive nothing in return. So participating in a crowdfunding campaign is always a bit of a gamble.

The Coolpeds iBike: A crowdfunding fail?

In the summer of 2018, a wave of disgruntled readers who invested in the Indiegogo-hosted Coolpeds iBike crowdfunding campaign  hit the Elliott Advocacy helpline.

The inventor of this electric bicycle, Tony Chan, collected over $43,000 through his crowdfunding campaign. On paper, that looks like a crowdfunding success. Chan’s backers say it was a crowdfunding fail — for them. Two years later, his investors are still waiting for their $500 electric iBikes.

We first heard from David Judd, who explained that he had been waiting since 2016 for the delivery of his iBike. Chan told Judd that his iBike had been shipped and then lost during delivery.

“I invested in the Coolpeds iBike campaign in 2016,” recalled Judd. “It’s pretty obvious that Tony Chan is a thief. He received money for an item and has not delivered it.”

And then the next day, we heard from Maggie Janik.

“I purchased the Coolpeds electric bike in September 2017. I never received the bike and the seller doesn’t respond to me,” wrote Janik. “Others have had the same experience. Can you help?”

Unfortunately, Janik’s email suggests that she was unaware of the nature of crowdfunding. She didn’t actually purchase anything — she was, in fact, investing in an idea. An idea that always had the possibility of failing.

Each day, I collected more emails from more of Chan’s crowdfunding investors. The paper trails were all the same. Chan promised the iBikes were on their way.

This crowdfunding fail had impacted Joy Zelmanovich the hardest. She had invested in two of Chan’s elusive electric bikes.

“I was an Indiegogo crowdfunding backer for the Coolpeds Electric bike,” Zelmanovich reported. “I paid for two iBikes, each $499 and even though the backers completely funded this campaign, I have not received either bike.”

A failed crowdfunding campaign, but there’s Chan on Shark Tank

Then in February 2018, his benefactors were surprised to see Chan’s appearance on Shark Tank. There, he was asking Mark Cuban and company for $250,000 to fund more of his ideas.

The new inventions that Chan pitched to the Shark Tank experts included an electric scooter/luggage combo and a $9,000 electric car. Chan made no mention of his Coolpeds electric bike during the appearance. But his investors were watching. And they were getting angry.

The Shark Tank panel was intrigued by Chan’s ideas, but ultimately, they all declined to support Chan and Coolpeds.

Contacting Indiegogo about this crowdfunding campaign. Is it a scam?

As the complaints about Tony Chan and his Coolpeds iBike continued to roll in, I reached out to Indiegogo. Indiegogo bills itself as a crowdfunding platform that promotes “Clever things for curious humans.”

I had a lengthy phone call with an Indiegogo spokesperson concerning this specific campaign and crowdfunding in general.

One thing became clear from our conversation: There really is a murky area between a crowdfunding failure and an outright scam. But to a crowdfunding contributor, the result is precisely the same — a financial loss with nothing to show for it.

As a result of the many complaints against Chan and his Coolpeds crowdfunding campaigns, Indiegogo has banned him from future crowdfunding on its platform. The company provided me with this statement after it completed its investigation.

The Indiegogo Trust & Safety team has conducted an investigation and found that the campaign is not complying with the site’s Terms of Use — which require the campaign owner to fulfill the promises they make during their campaigns. The Trust & Safety team has blocked the campaign owner from running future projects on the platform and is sending this campaign to a third-party collections agency in an attempt to recoup backer funds.

As was explained to me by the Indiegogo spokesperson, once the company releases the money in the campaign to the inventor, there is little that Indiegogo can do to retrieve it. And unless there is direct proof of fraud, there is almost nothing that a contributor can do to get their money returned. A crowdfunding fail is not necessarily a scam; it can be merely an unsuccessful idea with no fraud involved. A crowdfunding investor is never guaranteed any return on their contribution to the campaign.

Is the Coolpeds iBike really a failure?

When I read through all the paper trails associated with the various consumers who contacted us, Chan never says his iBike idea failed. In fact, his iBike is available for purchase on the Coolpeds website. So this is where the story becomes more complicated.

If Chan has iBikes to sell and the idea wasn’t a failure, then he should first fulfill the requests for the item from his crowdfunding backers.

As I began writing this cautionary tale, I decided to try to get an explanation directly from Chan.

The consumers who contacted us noted that Chan stopped updating the crowdfunding messages on Indiegogo in January 2018. He also stopped responding to his backers. And when I went to the Coolpeds site, I noted that the “contact us” send button was missing.

I reached out to Ampere Motors, which has partnered with Chan to market his electric car. Ampere Motors is not associated with the Coolpeds iBike crowdfunding fail in any way. But a representative was happy to give me contact information for Chan.

Is this crowdfunding fail turning around?

I sent an email to Chan in July 2018 and explained that we would be publishing an article about the many consumers who contacted us about his Coolpeds iBike. Although Chan did not respond to me, I immediately heard from “Ken,” a representative of Coolpeds.

Ken apologized for the over two-year delay in the delivery of the Coolpeds iBike. He said that it had to do with international shipping laws. I explained that none of the consumers contacting us were international customers. But Ken went on as if that made no difference; however, he was happy to announce that:

Hi Michelle,

Thank you for your reply.

We just informed the supporters on Indiegogo that we will ship the bikes to them again or be happy to refund them.

We have delivered successfully on our previous campaigns. And this one was a little surprising to all of us due to the size of the bike to ship internationally. We will resolve the issue asap.

So we are waiting for their replies at the moment. We greatly appreciate your effort.

A surprise message from the Coolpeds founder

And surprise! I went back to the Indiegogo website and Chan had added an update — the first one since January 2018.

Tony Chan Campaigner:
Dear Customers, we greatly apologize for late reply. We hope most of the domestic customers who have received the ebikes are enjoying them. We are sorry again that we have not been able to shipped internationally to the 5 or 6 customers outside of the US due to customs and logistics restrictions. Finally, we have finally solved this issue and can deliver to most of the international customers now. We are happy to send the bikes again or refund to customers such as David, Mark, Nathan, etc. Thank you!

And so, it looks like our story has a happy ending for these unsuspecting investors. Most of these contributors only want their money back now, as they have lost all faith in the iBike.

By the way, If you’re in the market for an electric car, Chan is taking $200 “refundable” deposits. And as an added perk, you get a “free Coolpeds iBike” as a bonus… or will you?

Postscript: A promise of refunds for the missing electric bikes

After this story was filed but before it was published in August 2018, Tony Chan did respond to me. He reiterated the promise to process refunds for each of the five consumers who contacted the Elliott Advocacy team. He also explained that some of the Coolpeds crowdfunders were located in Hawaii (Judd) and, because of the electric bike’s lithium battery, that complicated the shipping. (None of the other consumers who contacted us are located outside of the continental United States.)

Hi Michelle,

Thank you for your efforts. We will process the refunds asap.

Also will you please mention in your article that we have shipped iBikes to most customers already except the few international ones due to customs and logistics restrictions? So it is fair to us. We can send you proof of shipping. This is very important to be a fair platform. I believe we have shipped out about 100 bikes to the campaigns.

And just in case you are cynic — never fear! I will follow up to make sure that those refunds are processed before I officially close this case.

Author’s note: Unfortunately, Chan has not provided the promised refunds. In fact, after this story originally ran in August, Chan stopped responding to me. He has ignored all of my follow-up emails. Several of the “investors” mentioned in this story have informed me that they intend to begin, or have already begun, the process of filing small claims lawsuits against Chan. (Dec. 2018)

2019 Coolpeds iBike update

As I promised, I’ve continued to follow up with the consumers who contacted us about this crowdfunding campaign. And periodically over the past year, I’ve received new requests for assistance from other disgruntled backers of the Coolpeds iBike crowdfunding campaign. And I’ve even received a complaint from a person who put down a deposit on the Ampere car and who was becoming worried about that investment. I forwarded all the complaints to Chan. He remained silent, however, and didn’t explain why he never sent the refunds last summer after giving a promise that he would.

That is until recently.

Eight months later, Tony Chan of the Coolpeds iBike campaign reappears

Suddenly, eight months after I last heard from Chan, I received an email. It began:

Hi Michelle, We just found your email in our other mailbox somehow. Sorry for the late reply. We decided to ship out iBikes instead of refunding 4 of the 5 customers because our goal was to build bikes for customers. 

Anyway, we informed our backers on Indiegogo more than 1 month ago to send their shipping addresses to us. Because we received the last batch of bikes for the last 4 or 5 customers who have not received their bikes. [But] more than 100 have received their bikes.

Once all those customers have received their bikes, would you still call this a failed campaign? Could you amend the title of your article and give us some fair treatment? 

Also, even before your article, we delivered to over 95% of the customers. Why would you call this a failed campaign with 95% of the iBikes delivered? This is very unfair to us, don’t you think?

They received Coolpeds iBikes and I received more complaints

Chan asked for the addresses of all of the consumers mentioned in this article — again. And so I forwarded the addresses of each of these “investors.” And soon Coolpeds iBikes began to appear on the doorsteps of all the people who asked for the Elliott Advocacy team’s assistance. And just as quickly complaints began to arrive in my email box. I first heard from Maggie Janik.

Hi Michelle, I did receive the bike but it is unusable because I can’t unfold it (it’s a folding bike). It appears that it was manufactured that way and not damaged in shipping but I don’t know. Basically, the hinge is about an inch off so the frame doesn’t line up and the frame can’t be closed. The frame is completely off.  This is not my first folding bike. The bike runs but it’s not as described.  It’s a 250W motor and not 350W, it does not go 20mph.  The seat is not the one that was described when I bought it, also missing the phone holder. I heard from another buyer (Joy) that she had exactly the same issue with her bike. The frame where it folded/unfolded was bent so it was not able to be positioned in the locked bike position. 

It’s possible to ride the bike but unsafe.  I also had a random screw fall out of the folding handle bar.  And again, the motor is not powerful enough, it was supposed to be 350W not 250W so it’s very underpowered and can’t really push an adult, maybe it’s ok for a child.  The battery barely lasts 6 miles and not the promised 30 miles and the speed is less than 12mph and not the promised 20mph. It seems like Tony had some quality rejected bikes and decided to send those to us.

And Janik sent pictures of the problematic iBike:

This is the Coolpeds electric bike Janik received two years after the crowdfunding campaign ended.
Janik finally got the electric bike unfolded.
The elusive Coolpeds Electric iBike arrived in an unusual condition.
The condition of the Coolpeds iBike when it arrived caused Janik to suspect it wasn’t brand new.
This crowdfunding campaign was a disaster for these consumers.
Janik says this motor is not the correct size for the electric bike.

Then I heard from Jerry Siskind

Hi Michelle,

I had issues unfolding as well.  Definitely not as easy and smooth as they make it out to be in the sales video. The instructions aren’t great and the quality does not seem high. It would have been nice if they created a youtube video to walk people through the setup. Once fully assembled I’ll try it out but I have a feeling I will be selling it.

One Coolpeds crowdfunding refund

David Judd was the most fortunate of the group. Chan admitted that he could not ship any iBikes to Hawaii and so he finally processed a refund for Judd.

“I got $476 (instead of $499) from [redacted] in Hong Kong….,” Judd told me. “I think the $23 was the PayPal fee for a foreign transfer. Weird.”

Judd was just happy to see the refund he’d been waiting three years for and said he was glad to be able to put this fiasco behind him.

I asked Chan if he would process the refunds for the other crowdfunding backers since they were dissatisfied by what they received, but Chan had other things on his mind.

Coolpeds: Update your article — this is not a crowdfunding fail!

“Could you kindly update [your story] and the title of your article asap?” Chan asked me.

I explained the problems that Janik and the others were having with the Coolpeds bikes and my belief that an update was premature.

Tony, The title will stay the same. But I would like to include any statement/explanation you would like to offer to all your backers who invested in your idea many years ago. I think it would be great if you explained why it took so long to provide this product and/or the refunds you promised me you were sending last summer. I always strive to be fair and even-handed with my reporting and I believe I have been with you as well. This has been a troubling fiasco for many of the consumers who believed in you and your idea. I imagine that a truthful explanation and/or apology might go a long way to repair your brand.     Michelle

Three months later — I’m still waiting for that explanation. And by the growing list of comments under the failed crowdfunding campaign on Indiegogo, it looks like many angry Coolpeds “investors” are still waiting, too.

(Author’s note: This article first appeared in August 2018. This version includes August 2019 updates).

 

 

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