UPDATED 23:25 EDT / AUGUST 27 2017

APPS

Crowdfunded earbud startup Kanoa shuts down without delivering a product

Kanoa Inc., a San Francisco-based company that promised to sell wireless earbuds that competed with Apple Inc.’s AirPods, has shut down without filling customer orders despite having raised approximately $150,000 in a crowdfunding campaign.

The company, which went public with its campaign in 2015, originally promised to deliver its wireless earbuds to customers in April 2016, Not only did it not deliver, it may have shut down thanks to a scathing review.

The review, posted by a YouTube user by the name of iTwe4kz who had received a preview version of the earbuds, claimed that everything about the product failed: The app didn’t work, the earbuds failed to pair with a phone, the battery didn’t charge, the connection kept dropping and — even more bizarrely — the product manual was blank.

It gets even worse. According to Forbes, iTwe4kz, whose real name is allegedly “Cody Crouch,” contacted Kanoa before posting the negative review to discuss the problems he experienced, only to have the company offer him a $500 payment to post a positive review.

Kanoa itself is blaming its failure on the withdrawal of an investor, but that investor may have pulled the pin following Crouch’s review of the product. “Most significantly and to our unpleasant surprise, our investors recently backed out of our funding round,” the company wrote. “We do not blame them, but this was a pivotal setback since capital was essential for ramping up production.”

The case highlights again the risk consumers take when investing money in a crowdfunding campaign that promises a product in return for their investment. Not all crowdfunding campaigns fail to deliver, of course, but campaigns that fail to deliver on promises are an issue. The Federal Trade Commission not only has said it would go after “scummy Kickstarter projects” but it has already done so, such as with The Forking Path Co. in 2016.

Photo: Kanoa

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