December 12, 2019
LANSING – Michigan Attorney General Dana Nessel today announced her office is investigating two related Grand Rapids businesses — Blvck Pods, LLC and BlvckedPods, LLC, which sell wireless earphones (earbuds) online. These two Michigan companies have been the subject of numerous complaints from consumers around the world who believed they were buying “100% Custom and Unique” products produced and shipped from Grand Rapids. In reality, the companies’ operators are running a drop-shipping business by taking orders and relying on a Chinese company to fulfill the orders, which allegedly never arrived or arrived in a non-working condition. The businesses also allegedly failed to promptly refund their customers.
After reviewing complaints from the Better Business Bureau, information publicly available online, and media stories recounting consumers’ experiences, Nessel’s Corporate Oversight Division filed an ex parte petition for investigative subpoenas against the two companies in Kent County Circuit Court, seeking documents and testimony from the companies The Court issued an order granting the petition on December 4. Company owners were served this morning.
“Drop-shipping is a variation on the all-too-familiar theme of duping and bilking consumers,” Nessel said. “With this investigation, my office is taking the first step toward stamping out illegal activities in this new and growing online arena.”
The ex parte petition filed last week includes numerous factual allegations demonstrating that the Attorney General has probable cause to believe the companies have engaged and continue to engage in deceptive activities that violate Michigan’s Consumer Protection Act.
Drop-shipping businesses have become prevalent in recent years. Sellers set up a website and sell products they do not keep in stock. When an order is placed, the seller sends it to a third-party — the manufacturer, another retailer, or a wholesaler — who ships the goods directly to the buyer. Drop shipping is not itself unlawful in Michigan, but it creates much room for problems and abuse. Improperly operated drop-shipping businesses raise concerns under the MCPA.
In addition to the investigation opened by Nessel, her Consumer Protection team recently issued a Consumer Alert, “Drop-Shipping: What You Need to Know Before You Buy or Sell Online,” to educate Michigan consumers on this business practice and how they can protect themselves.