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Businesses Software The Almighty Buck

Plastc Swiped $9 Million From Backers, Now It Plans To File For Bankruptcy and Shut Down (theverge.com) 169

Plastc announced today that it is planning to file for bankruptcy and will shut down on April 20, 2017, after raising more than $9 million through preorders and shipping to no backers. "Plastc launched in 2014 with the promise of shipping a single card that could digitally hold 20 credit or debit cards that a user could switch between," reports The Verge. From the report: With that, all backers' money is lost, and no Plastc cards will ship. Plastc announced the news on its website today along with the fact that all its employees have been laid off. Its customer care and social media channels have also been shut down. The company explains that it thought it would close $3.5 million in funding in February this year, but that fell through. Another possible investment deal of $6.75 million fell through, too. What's not clear is how more than $9 million wasn't sufficient to get backers their orders. Backers will likely have questions and want their money back, but with no one to turn to from Plastc, they'll likely be out the cash.
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Plastc Swiped $9 Million From Backers, Now It Plans To File For Bankruptcy and Shut Down

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  • Uh, guys? You check the calendar? You're a little late with this story, don't you think?

  • by Anonymous Coward

    Bettr thn gret, fantastc!

  • by bferrell ( 253291 ) on Thursday April 20, 2017 @11:49PM (#54274243) Homepage Journal

    If one were to look at the long term history of the financial industry (going back to before wall street was wall street), you'd find bankers, stock brokers et al were inherently distrusted. Financial fraud is/was easy so they did it... Over and over and over.

    This is why there has historically been heavy regulation and oversight.

  • I did not fund this one, but these guys: https://popslate.com/ [popslate.com] took my money and still have that website up (though it does say that their models are "sold out"). Message this March that they would not be refunding or fulfilling orders.
    • Yeah this is why you almost never back hardware on kickstarter. I mean software and goods that have a known manufacturing requirement and backing can and do still fail. But at least there the barriers to success are well defined. Once software is done distribution is post scarcity in all practical terms, and already known manufactured goods have no unknown design problems and well defined paths towards manufacturing. But hardware that doesn't exist yet needs to be designed to work, then the manufacturing of
      • It's not always the unknowns and setbacks in turning new hardware into a product that trip up these projects, often it simply comes down to inexperience with the process. Time, effort and cost to go to manufacturing are underestimated, and sometimes entire steps are missed. "It costs how much to have an injection mould made?". "Oh right, we need FCC, EC and GOST certification to sell in these markets... how do we get these?" Even making a simple product like the Plinth [myplinth.co.uk] turned out to be a struggle (the g
  • ...having too many credit cards in your wallet was not one of them. Can't say I'm surprised it turned out to be a scam. The latest crowdfunded crap I've seen being promoted on Facebook: some shysters trying to convince investors that a Samsung Tablet with VNC installed on it is a novel invention.

    These days, crowdfunding seems to be less garage/backyard tinkerers, and more already wealthy con artists using it as an easy source of income. Can't say I blame them - if I had the means to promote and profit fr

    • That's one of the nice things about Kickstarter: you can pitch your idea and gauge the market before spending or raising a dime, but those who say they'll buy it if you build it will have to put their money where their mouth is. And apparently thousands of backers did think having a lot of cards was a problem worth solving. Ages ago I too had a thought that it would be nice if I could clone all my cards onto a single one, but over here things have been moved to chip & pin for years now.
      • Arguably I'd be better off with fewer cards in my wallet, but only three of those deal directly with money. I've got a car insurance card, health insurance cards, a card good for a discount at Holiday gas stations....

  • by Required Snark ( 1702878 ) on Friday April 21, 2017 @01:33AM (#54274499)
    This is the de facto business model in the US: steal from somebody. To prove my point all I have to do is say "Wells Fargo".

    The three types of suckers are investors, clients and workers. The most profitable form is to steal from all three and keep the fraud rolling along indefinitely. That is the fundamental model for the financial industry. All the top banks, investment houses, hedge funds, etc skim the wealth generated in the country and put it in their own pockets. That's, along with regressive taxes, underlies the ever increasing wealth disparity between rich and poor.

    So what do you think will happen to the scam artists who pulled this off? Will they suffer any economic or reputational damage? No way. They all got out fat and happy, and their business reputation will be enhanced because of their successful raid on a gullible public. I expect they will get better positions with larger companies because of their proven track record of theft.

    I expect no change, although it might get worse. I just wish they would stop calling it capitalism.

    • by kubajz ( 964091 ) on Friday April 21, 2017 @03:24AM (#54274717)
      I am surprised you were seriously modded as "interesting", since I find a number of your claims dubious.

      1. I am not sure about US banks, but in my country banks earn money by transforming the maturities and amounts of deposits and spreading around risks to give loans, as well as providing other services such as card payments. Competition forces them to work relatively efficiently.

      2. In my country, people who do not display "due care" when acting as officers of a limited liability company can be sued.

      3. I very much doubt that being publically dragged through the dirt for wasting $9m of customers' money will look good on their CVs, let alone help them get better jobs.

      I do admit that sometimes scams and fraud happen but I do not share your conviction that the whole environment we live in is built on it alone.

      • by swb ( 14022 )

        3. I very much doubt that being publically dragged through the dirt for wasting $9m of customers' money will look good on their CVs, let alone help them get better jobs.

        Depends on how they spin the story and how well their alternative facts get accepted.

        I'd wager that failure is very common in entrepreneurial circles and some kinds and amounts of failure may be seen as merely good experience or even some kind of requirement.

        So unless this was a particularly notorious example of fraud, once the details are forgotten this is one more didn't-quite-take-off entrepreneurial story to tell.

      • 1. I am not sure about US banks, but in my country banks earn money by transforming the maturities and amounts of deposits and spreading around risks to give loans, as well as providing other services such as card payments. Competition forces them to work relatively efficiently.

        That was the case in the US from the Great Depression until the 1990s. Then we repealed the law that required banks to be so boring.

        Now banks can invest in derivatives and all sorts of interesting and exciting things. When those exciting investment vehicles turn out to be garbage, we get the 2008 recession

        (The 2008 recession in the US was primarily caused by bundled mortgages. Banks and bank-like entities would make a mortgage loan to any vaguely human-like entity that could demonstrate they were alive.

        • by tlhIngan ( 30335 )

          That was the case in the US from the Great Depression until the 1990s. Then we repealed the law that required banks to be so boring.

          Now banks can invest in derivatives and all sorts of interesting and exciting things. When those exciting investment vehicles turn out to be garbage, we get the 2008 recession

          (The 2008 recession in the US was primarily caused by bundled mortgages. Banks and bank-like entities would make a mortgage loan to any vaguely human-like entity that could demonstrate they were alive. Sin

          • I was working in the industry at the time it started to go down. I was a contractor implementing predictive models. I learned that bundles of mortgages were sold in "tranches", where the first of four tranches got all the money collected up to a fourth of the bundle, and the second, third, and fourth got what was left.

            The model dealt reasonably well with rising property values. The possibility that property values could fall seems to have never occurred to the modelers (nor did they have the data to b

            • The idea that the companies were selling people who don't do this finance thing very well was that they'd get the house, live in it for a while, and even if they defaulted on the mortgage the house would be worth more than the value of the mortgage, so they would at least be able to walk away without debt or even with some profit.

              The secret was refinancing.

              You take out your NINJA loan (also known as a Liar's Loan) because you can't qualify under normal conditions. After 3 years or so you refinance. And you keep that pattern up until the loan-to-value on the property is low enough that you can qualify for a normal loan.

              It worked great until property values stopped shooting up, and thus you couldn't pull off your next refinance.

      • In my country, people who do not display "due care" when acting as officers of a limited liability company can be sued.

        The Wells Fargo workaround is to insinuate to their workers that they can make fake accounts, and then put enough quota pressure on to make sure they have to. Then, when this is found out, the poor saps on the front line get thrown to the wolves, while the management that forced them to break the law or lose their jobs gets to claim innocence.

    • when you're young and broke, $9 million sounds like a lot of money but its not going to give you a very comfortable life for long these days. Middle class now needs a nest egg of about $2-5 million in retirement just to maintain their middle class lifestyle. This company may very well be a sham but I wouldn't assume the folks running this won't be more damaged than enriched.
  • by spiritplumber ( 1944222 ) on Friday April 21, 2017 @01:42AM (#54274511) Homepage
    Kickstarter and Indiegogo exist for funding, well, indie efforts or attempts to start a business. These high-profile failures (these guys, Fontus, Juicero) make it hard for those who play by the rules to do well.

    Three years ago I did a small crowdfund for a solid state laser cutter; we got 300% funded, delivered our backers' orders in 120 days, and everyone was happy. Small problem: I tell people this now, and nobody takes me seriously because "oh, crowdfunding? must have been a scam of some kind".

    I'm ready to go with my next product and since my last one was "too small scale" investors won't talk to me.

    As usual, a cool new ecosystem was ruined by parasitoids and saprophytes.

    • by GeekWithAKnife ( 2717871 ) on Friday April 21, 2017 @03:00AM (#54274663)

      I think you got one thing wrong. The "cool new ecosystem" was not ruined by 'parasitoids' it was ruined by a lack of accountability.

      Look at the Skully-AR1 funding on Kickstarter. This was a product with genuine potential, had working prototypes etc.

      It's not that the founders were running out of ideas or their project was jeoperdised by scope creep or the like. They were blatantly using the money they got from backer for buying cars, last minute flight tickets to vegas, hotels, strip clubs and when the product did not arrive and there were delays they eventually filed for bankruptcy and made excuses.

      Look at the shit they bought on campaign backers' money:

      Rent for the brothers' personal apartments in the Marina
      Security deposits for an apartment in Dogpatch used by the Wellers
      Weekly apartment cleanings
      Personal grocery bills for the Wellers
      All restaurant meals for the brothers
      Mitchell Weller's Dodge Viper, which was claimed for insurance following an accident, as well as the new Viper purchased by the company to replace it

      Check here -> https://www.buzzfeed.com/nitas... [buzzfeed.com]

      On the back of that, at the time, I pulled out of a major indiegogo funding campaign because I no longer had faith in the model. When I signed up to to it it had a large "back out at any time" message on the page. After considering the matter of Skully I decided to back out and was confused as to how this is done from my backers page. I read the FAQ and it simply said that I go to my backers page and hit the "Refund order" button. So simple except THERE WAS NO REFUND button.

      I asked and I was told that SOMETIMES there is no refund button and that funds have gone to the campaign owner. So I cannot get a refund from Indieggo because they do not have the money. I emailed the campaign owner and got no response for two months. As I had no other information to go on I researched the campaign, backer and related company and sent them letters threatening to sue as they are subject to EU law (Luckily because US law is really shit on these sort of things). After some haggling I got my funds -12% for various fees, 2% were to Indiegogo...and you know what I was lucky to get anything at all.

      They have since clarified their refund policy further -> https://support.indiegogo.com/... [indiegogo.com]

      Simply do not believe ANYTHING a campaign page says. It might very well say "hassle free refund." but really should say "limited refund options occassionally available, terms and conditions apply. If you believed this was honest and bought based on that assumption you're a sucker hahahaha"

      Now ask Skully-AR1 backers if they got anything yet? Helemt? Refund? An apology? - There is ZERO accountability.

      We MUST convince Indiegogo and Kickstarter - basically crowd funding in general to do more.

      Firstly I would like FULL DISCLOSURE expense reports of backers money. There is NO excuse not to let backers of your porject know how you spent their money.
      Secondly I want the crowd funding site to review sufficiently large projects, say over $1 million with a third party registered accountant to check this is not all BS.

      Lastly, for blatant misuse of funds amounting to fraud I would like for Kickstarter/Indiegogo to sue these people to the ends of the Earth on backers behalf. I will pay good money, more than my original investment to make sure fraudsters are dealt with as harshly as possible.

      Without any safety checks and so on I tell you now I will never ever back any product that has not been released and review or a has a money back guarantee I can trust.

    • Thing is quite a lot of failures aren't scams either. Turning something into a physical product is much, much harder than most people realise, especially if you're aiming for mass manufacture. It's not even easy to hire people to do it: if you don't know enough about it then even figuring out if the engineer in front of you is good or not is incredibly difficult.

      There are some successes like yours (and a few I've backed), some fail due to legit business reasons (one I backed), some fail due to wild optimism

    • So what is the alternative though? Middle men who evaluate prospective investments and allocate your savings accordingly? That is basically how the financial world outside crowdfunding works, and the result has been that central banks have to keep bailing out the bad investments to the point where almost every asset class is detached from any fundamental valuation, and people are paying governments to borrow money from them.

      I actually think we are closer to a working system in crowdfunding. Yes there are a

      • An alternative could be "Okay, you got funded! Here's a google docs spreadsheet, accessible to all backers, that you can fill with - roughly - what you spent this week, and for what. You have to update it at least once a week. If more than X% of your backers vote to look more indepth, we will look more indepth."

        What I did for my indiegogo was update the page with how far along I was ("Today the heat sinks came in! Today we finished machining holes in them! Today the PCBs came in! Today I bought a toaster

    • So what you're saying is a system where people emotionally "invest" without any real information or due diligence, sometimes creates massive failures, is now broken because the inevitable has happened? I'm sure a massively larger population have been ripped off by ebay transactions yet it still thrives with both backers and skeptics. btw, congrats on your successful campaign. Why not just focus on promoting that positive experience.
  • by Anonymous Coward

    takes off with the loot. This is just one more in a long string of heists that Americans have pulled off using crowdfunging websites. It's the American business model I guess, find someone who is willing to pay or invest, then just make off with the money, knowing very well there was a clause in the contracts or agreements that allowed you to.

    If you're an American, you may have some chances to recover your money or investment. Which also gives the signal to Asians, Russians, and Europeans: if the business i

  • All the people who used shout about onerous government regulations that kills jobs and deprives us of liberty will keep quiet now. They will pipe up only when people talk about doing something about fraud.

    It is quite easy to steal small amounts of money from a large number of people. Most people will not pursue any serious legal action.

    This is a limited liability company. All profits and assets will flow one way to the owners, all liability will stop with the entity that goes bankrupt. But corporations a

    • If you can prove fraud, you might be able to claw back unspent money from the assholes behind the corporation. In the US, it isn't going to be easy, and if the fraudsters have already spent the money you're SOL.

  • Because Lord knows I want to trust my financial transactions to a start up with no proven record of performance or trustworthiness, and pay for the privilege!

  • The summary is wrong, these were not "preorders". This is the whole problem with crowdfunding and it's the reason I think they either need to either outlaw it, or require some sort of educational barrier to entry. Require new users to go through a course and take a test at the end so they understand WTF they are actually doing with their money. Most people do not understand that Kickstater and indiegogo are not storefronts to go preorder stuff, they are sites for FUNDING a company or product. That comes wi

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