[co-author: Stephanie Kozol]*
In September, Pennsylvania Attorney General (AG) Michelle Henry filed a lawsuit against Pittsburgh-based Digital Dream Labs, Inc., and its CEO, Harold Jacob Hanchar, individually and in his capacity as CEO. In the lawsuit, Henry brings causes of action under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1, et seq., and the Federal Trade Commission (FTC) Mail Order Rule in connection with to the company’s sale of certain edtech tools and small robots — namely, the Vector 2.0, Cozmo 2.0, and Butter Robot product lines.
According to Henry’s statement on the lawsuit, Digital Dream Labs accepted approximately 14,000 prepaid orders for the robots between November 2020 and January 2024 but failed to fulfill “most” of those orders without offering refunds or providing consumers with updates regarding the delays.
Henry alleges in the lawsuit that impacted consumers paid between $147 and $655 for each robot, with more than $4 million in combined sales. The AG’s Bureau of Consumer Protection purportedly “has received numerous consumer complaints relative to the Defendants’ failure to provide ordered merchandise, or in the alternative, issue a full refund, in a timely manner” despite the passage of several years.
The lawsuit accuses Digital Dream Labs and Hanchar of violating Pennsylvania’s Consumer Protection Law by failing to provide prepaid merchandise in a timely manner; making misrepresentations as to advertised delivery dates; failing to notify consumers of their right to cancel, denying consumers the ability to cancel undelivered orders; and failing to issue prompt, full refunds. The lawsuit also alleges noncompliance with the FTC’s Mail Order Rule, 16 C.F.R. § 435.2 et seq., for allegedly providing consumers with shipment dates that were made up, failing to explain the delays, and failing to offer impacted customers the opportunity to cancel their orders and receive a prompt refund.
Henry is seeking restitution, civil penalties of $1,000 to $3,000 per violation, and costs. The suit also seeks to enjoin the company from offering presales/future sales of any goods.
Why It Matters
State AGs wield significant consumer protection powers, and consumer complaints that impact a significant number of constituents in any given state may draw the attention of state regulators, leading to investigations and litigation. Henry’s lawsuit highlights risks associated with failing to deliver products on time and in a manner perceived to be deceptive or unfair.
*Senior Government Relations Manager
