Jul 12, 2015

Stratasys Faces Fraud Lawsuit over MakerBot 5th Gen

As reported by Engadget, Makerbot is facing a lawsuit that accuses its parent company Stratasys of fraudulent scheming of their customers. The lawsuit concerns the purchasing period between January 6, 2014 and April 28, 2015, during which Makerbot was already selling its fifth-generation Replicator printers.

The main point of the lawsuit is the fact that the 5th Gen Replicator extruder (Smart Extruder) is flawed, and that Makerbot knew about it since the product testing phase that revealed high levels of nozzle clogging occurrence. Nevertheless, the company continued to sell the problematic printers to its customers.

The plaintiffs also go on to add that when overwhelmingly negative comments from people who purchased the product arrived, Makerbot did all they could to wipe the feedback by shutting down its Google Groups discussion. The main reason for all this was supposed to drive investors and stock prices while failing to acknowledge the fact that their target consumer market does not exist yet.

This may come as a shock in the world of 3D printing technologies as Makerbot happens to be one of the most commercially successful brand in the field so far, and was also renowned for the quality of its products. While Stratasys is know for its strict QA parameters, MakerBot represented a risky $400 million investment, and there have been many reports as to below par performance of several machines. However, these can also be ascribed as challenges that are inevitable when you are growing rapidly in an unexplored market.

The company seems to have acknowledged the fact and subsequently proceeded to change its managerial asset during 2015 in an attempt change and optimize their strategy. MakerBot’s CEO Jonathan Jaglom though still claims that the latest version of the “Smart Extruder” is actually improved over the previous model, as proved by a reported 74% satisfaction rate among users, and 40% decline in Smart Extruder customer support cases since February 2015.

This may mean that the company has adjusted their processes and is now really offering better support. This has not stopped the value of Stratasys stocks to collapse over the past few months, from record heights of almost $140 to the current $35. While the lawsuit alleges that this drop was caused by fraudulent practices in the MakerBot-related business, it must be said that almost all 3D printer manufacturers have undergone a similar drop in stock value, as the financial markets hype of 2013 died down.

Whether Stratasys should repay its investors for it will be up to the courts to decide.

License: The text of "Stratasys Faces Fraud Lawsuit over MakerBot 5th Gen" by All3DP is licensed under a Creative Commons Attribution 4.0 International License.

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