Hybra’s Kickstarter Backers File Complaints, Allege Fraud—And Wait

When we last caught up with Hybra Advance Technology in July 2015, co-founder Joe Thiel told us the company’s legion of disgruntled Kickstarter backers, who forked over nearly $550,000 in 2013 to help Hybra develop wireless headphones called the Sound Band, would soon be made whole.

Beta test units of the headphones—which transmit sound through flat, vibrating panels when they make contact with the back of the ear, leaving the ear open, unlike conventional headphones—had been shipped to about 10 backers as a reward for larger donations, Thiel said. If all went according to plan, he maintained, Sound Band units would be shipped to the hundreds of remaining Kickstarter backers as soon as Hybra incorporated any feasible changes requested by beta testers, likely by the end of 2015.

Well, things didn’t go according to plan, because the Sound Band’s backers are still empty-handed. Adding insult to injury, some backers say, is Hybra’s most recent Kickstarter update, dated Dec. 15, 2015. It appears to be a cut-and-paste e-mail conversation about components, but without any additional context, it’s difficult to make heads or tails of it. An update posted by Hybra the day before had a little more meat to it: a part with an 18-week lead time, Hybra wrote, was in, which meant the company had “approved the build and assembly of 25 completed production grade SoundBands.”

The update ended on a hopeful note: “From this point forward we will update as important milestones are reached. In the coming weeks each day will be touch and go, but we hope to steady the ramp, after the first 25, in quantities of 200 very soon, then increase to 400 unit batches until all the Kickstarter units are delivered. We will keep everyone informed at each step and continue to provide high quality images of the process.”

It’s now four months later, with no further updates on Kickstarter. During last year’s interview, Thiel had said he would encourage beta testers to post reviews and videos within the boundaries of the confidentiality agreements they signed, so other backers could see the headphones were legit. But a search of Kickstarter and YouTube has not turned up any reviews from beta testers or even comments confirming they received their units. (We’ll hear more from Thiel below.)

Welcome to the chaotic world of the Sound Band. Here’s what’s new: Hybra backers have filed at least 30 formal complaints with the Federal Trade Commission and three with the Michigan Attorney General’s office; Thiel himself is denying accusations of fraud; and Kickstarter maintains it is merely a facilitator between project creators and supporters. The situation continues to shine a spotlight on the practices of crowdfunded companies, as well as advancing the strange story of a local startup whose founder steadfastly claims the Sound Band project is moving forward.

A quick backstory, in case you’ve missed our previous coverage: Warren, MI-based Hybra Advance Technology initially popped up on Xconomy’s radar in 2013. (The company got started in 2009 to focus on wireless audio products.) After an early prototype of the Sound Band won a prestigious design and engineering award at CES, Hybra set out to raise $175,000 on Kickstarter to help pay for what it characterized as final manufacturing costs. The initial response from Kickstarter backers was enthusiastic: When Hybra’s campaign ended on Sept. 13, 2013, 3,292 backers had pledged $547,125 toward commercializing the device. Hybra told its backers the estimated date of delivery for Sound Band would be December 2013, with other rewards promised as early as October 2013, mere weeks after the fundraising campaign ended.

Despite telling backers that the Sound Band was ready for commercialization, it soon became clear that the device had serious design flaws and other fabrication challenges, Thiel has said. So the initial team (minus Thiel) left the company, and an engineer with many years of experience was brought in to fix things. That was in 2014.

The relationship between Hybra and its backers became contentious almost immediately after the company blew its first self-imposed delivery deadline. As Hybra kept revising the production timeline and offering vague updates, the Kickstarter backers began vocalizing their dismay in the comments section of the Kickstarter page. As more time passed and Hybra’s updates continued to be deemed unsatisfactory by some backers, some of the more vocal commenters began accusing Thiel of fraud and requesting refunds.

Xconomy filed a Freedom of Information Act request with the Federal Trade Commission (FTC) to find out if Hybra’s backers had filed complaints with the federal agency tasked with regulating Internet commerce. A long, petition-like list of backers who wanted a refund had been circulating in the comments section for months, and people began suggesting that it might be more expedient to file FTC complaints. According to what we got back from the FTC in March, more than 30 backers from across the globe have thus far filed complaints with the federal government, most of them accusing Hybra of malfeasance.

A spokesperson with the FTC was unable to say whether an investigation into the company is underway, as the department doesn’t release details about investigations to the public. The Michigan Attorney General’s office confirmed it has also received a handful of complaints about Hybra’s Kickstarter campaign, but it similarly wasn’t able to say if it was looking into them.

The text of the backers’ complaints to the FTC have several recurring themes: … Next Page »

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Sarah Schmid Stevenson is the editor of Xconomy Detroit/Ann Arbor. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET_AA

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