Traverse City 3D printing company DreamLab Industries is under investigation from the Michigan Attorney General after the AG’s office, the Better Business Bureau and the Federal Bureau of Investigation received complaints from customers.
DreamLab had been 3D printing machine fixtures for small-scale manufactures, but decided to start making masks in March due to the surge in mask demand from the COVID-19 pandemic.
But the company couldn’t keep up with the amount of orders coming in, the company owner said.
The Attorney General alleges DreamLab is violating the Michigan Consumer Protection Act by misrepresenting its product for having approval it doesn’t actually have, false advertising, making false or misleading statements about price reductions, price gouging and failing to provide goods to customers in a timely fashion.
The state is subpoenaing records to shed light on the business practices. FBI agents interviewed CEO Brandon Williams – a Jackson native – in May after receiving complaints.
Williams chalks up the issues to trying to scale up too fast.
“We were just late on shipping products,” Williams told MLive. “There’s no fraud at all. We struggled to keep up with demand and we couldn’t get the materials in time.”
DreamLab was struggling to keep up with orders from the start. In late March – just weeks after coronavirus hit Michigan – it had produced 4,000 masks but had orders in for 20,000.
The first formal complaint came in early May from a customer who was told the masks would ship in seven to 10 days, but they didn’t arrive for two months.
“(DreamLab employee Autum Richmond) admitted that she had only been working for DreamLab for three weeks, was told to provide various excuses to customers as to why they had not yet received their masks, did not actually know what was going on, and herself had not yet been paid,” the circuit court filing says.
When the customer finally received his order, the masks were split down the middle and unusable.
Williams admits there were issues with the first masks, saying “everything took off so quick, there wasn’t a lot of time” for research and development. The company’s second model was “light years ahead” of the first, Williams said. The first model was “rushed out,” he said.
Other complaints told of similar issues – with two-month delivery times for unusable masks.
DreamLab eventually stopped taking new orders, but Williams admits he waited too long to do so. The company is now taking small orders again, but Williams is on his own making them after having to lay off his staff.
With a full staff, Williams said DreamLab can 3D print 100 masks per day. On his own, he said he can make 25.
The company started with six 3D printers but now has 140 of them to try to keep up with demand, Williams said.
Richmond told investigators Williams promised the Veterans Administration he could make 500 to 1,000 masks per week.
Williams printed shipping labels and told Richmond to send people the tracking number to “make it appear as if (their) order had shipped,” per the court filing. Rolls of shipping labels could be found at DreamLab that had been printed but not affixed to packages, Richmond told investigators.
The Attorney General also accuses DreamLab of price gouging, adding the website advertised masks for $15 as a reduced price from $20, when the masks had always been only $15.
DreamLab is also accused of having a link on its website where people could “donate” to health care workers. Williams admitted to investigators that money was not given to health care workers, but was used to subsidize the cost of mask materials.
Williams said he refunded everybody who donated, saying there was a miscommunication with his web person.
DreamLab’s website claimed government agencies were seeking orders with the company. Williams told investigators that the contact with government agencies was actually to see if DreamLab had emergency authorization to create masks – which it did not.
DreamLab barely pulled a profit, Williams said. The company was just trying to fulfill a need and provide masks when the pandemic started. Now, he’s scavenging for funds to hire an attorney.
“I’m still driving the same car. Everybody’s laid off. We didn’t make a killing. We were really out there to try to do the right thing,” Williams said. “There was no ill intent whatsoever. Nobody’s driving a Lamborghini.”
COVID-19 PREVENTION TIPS
In addition to washing hands regularly and not touching your face, officials recommend practicing social distancing, assuming anyone may be carrying the virus.
Health officials say you should be staying at least 6 feet away from others and working from home, if possible.
Use disinfecting wipes or disinfecting spray cleaners on frequently-touched surfaces in your home (door handles, faucets, countertops) and carry hand sanitizer with you when you go into places like stores.
Michigan Gov. Gretchen Whitmer has also issued executive orders requiring people to wear face coverings over their mouth and nose while in public indoor and crowded outdoor spaces. See an explanation of what that means here.
Additional information is available at Michigan.gov/Coronavirus and CDC.gov/Coronavirus.
For more data on COVID-19 in Michigan, visit https://www.mlive.com/coronavirus/data/.
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