Lily Robotics, the company that pre-sold the Lily drone, has announced the end of its business, despite raising $34 million in pre-sales and $15 million in private funding. The reason? She was sued by the San Francisco District Attorney's office for false and misleading advertising.
The San Francisco District Attorney's Office has conducted a “multi-month research" about Lily Drone and came to the following conclusion: The very expensive professional camera that brought the drone to company's promotional video it was not actually a Lily, but a DJI Inspire, something the creators failed to report. As a result, drone's fantastic aerial video ad was misleading prospective customers to make prepayment and ordering.
In addition, the company had promised the delivery of the drones in February 2016, which never happened. The prosecutor's office claims that the company's customers because of the delay asked for their money back, but Lily had used the money these to cover the $4 million bank loan.
The company had not used known websites for their advertising product and its pre-orders, like Kickstarter, but had developed an independent "pre-order" on its site. So not having a third party to check it the product was too late to be manufactured resulting in the demand for refunds from the prospective buyers. A rule of FTC Mail Order requires that if a pre-ordered product is delayed significantly, the company will have to refund the amount unless the customers declare they are not bothered by the wait.
This is the second Lily Robotics crime that has forced the prosecutor's office to file a temporary binding order to block Lily's assets.
Lily has promised to return the money but also has to pay civil penalties: $ 2.500 for each of the offenses described above for each case. Depending on how the judge will interpret the facts and how lawyers will present their views, the fine could be from a few thousand dollars up to $ 300 million.
