Coin Tries to Nickel and Dime Backers, Causes Outrage

Last fall, we first heard about Coin, a crowdfunded device that would supposedly let users store many credit cards into one swipeable gadget. After raising private funding a few months later, Coin went quiet – until the company recently announced that problems had caused a production delay, and that backers wouldn’t be receiving their units this summer after all. And that’s when Coin’s troubles really started.

According to CNET, Coin said that it would ask beta testers for an extra $30 to receive the finished product. After backers expressed their legitimate concerns – why should they pay more for a product they already paid for, while helping the company test their device? – Coin reversed that position and said beta testers wouldn’t have to pay that fee. However, then Coin revealed that the majority of backers who opted-in to the beta test wouldn’t actually be able to participate, due to the overwhelming number of backers who requested it:

“Due to a high opt-in rate of 96.25%, if you ordered after November 14th 3:06:38 PM PST it is unlikely that you are eligible for Coin Beta.  We have reserved 24% of the Coin Beta spots for Android users based on the mobile platform split of our pre-orders.”

In short, Coin’s best laid plans have gone to pot. Backers are angry, and the company’s not sure how best to proceed. This, of course, is a side-effect of the crowdfunding phenomenon. While sites like Kickstarter and Indiegogo have allowed many interesting ideas to get off the ground, the dynamic between creator and backer becomes a bit twisted. This situation is exacerbated when companies simply take pre-orders as a means of raising funds.

When someone “crowdfunds” a product, there’s an expectation and obligation there that the creator is often not ready to fulfill. Many times creators of campaigns that see a lot of success can’t adequately fulfill the sudden demand. To try to fix these issues, creators make missteps like asking backers for extra cash, and that can cause a backlash.

In the end, whenever you pre-order or crowdfund a project, try to remember that you’re paying money for something that is not only unproven – it’s most likely not even made yet. There’s no question that if you gave your money for something, you have a right to expect a return on that investment. But most crowdfunders seem to be unaware that they’re essentially gambling that the strangers they’re sending their cash to may not be able to make good on all their claims.

As ever, caveat emptor.

[Source: CNET]