Dolce & Gabbana (D&G) faces backlash over a bungled metaverse fashion venture.
A customer has sued the luxury brand, claiming significant financial losses due to mismanagement of their non-fungible token (NFT) offerings.
Delayed NFT Deliveries Lead to Major Losses
Luke Brown filed a lawsuit against D&G on May 16 in Manhattan federal court, alleging that the company failed to deliver on its NFT promises. Brown spent $6,000 on non-fungible tokens that were supposed to offer digital, physical, and experiential benefits. Due to delayed deliveries and unfulfilled promises, the assets lost 97% of their value.
Marketed as part of the DGFamily collection, the NFTs were to provide exclusive rewards and events but faced significant delays. Brown lost $5,800 and filed the lawsuit on behalf of affected buyers.
“Their standard operating procedure has been to promise products they fail to deliver, before abandoning a project and community they promised to support,” Brown’s attorneys wrote.
Dolce & Gabbana’s involvement with NFTs has not always been controversial. The brand set a record with its Collezione Genesi, a nine-piece virtual and physical collection that sold for nearly $5.7 million in 2021. The collection, created with UNXD, featured intricate designs and included both digital and physical items.
Nevertheless, experts believe that the brand can still preserve its reputation and continue to actively use Web3 tools for promotion.
“Trust is essential in Web3 because it’s still a wild and free industry where scams and cash grabs are everywhere. This causes people to be very suspicious and a lot more rigorous about the purchases they make. Dolce & Gabbana is certainly able to restore their reputation, but would require reimbursing existing holders with airdrops and doing everything they can to bring value to their existing NFTs before launching a new collection”, Somnia Network founder Paul Thomas told BeInCrypto.
Legal Action Highlights Market Risks
Legal disputes over non-fungible tokens are not uncommon. For instance, Hermès recently won a lawsuit against Mason Rothschild over MetaBirkins NFTs, which depicted Birkin bags. The court ruled in favor of Hermès, with Rothschild ordered to pay $133,000 in damages.
A joint study by the US Copyright Office and the US Patent and Trademark Office concluded that the current legal framework for NFTs is adequate. Existing intellectual property laws cover digital assets like NFTs, offering protection to consumers and brands without the need for new regulations.
“The key thing is not selling these goods as investments or assets to purely be speculated on price. Keeping NFT as memberships or linked to usable digital items can help brand avoid regulation concerns. Also working with reputable partners to help take their projects to market in a compliant way can help brands avoid the legal hurdles that digital assets pose,” Thomas advised.
In addition to such circumstances, the market has been in a slump, with trading volumes dropping by 30% in April.
Read more: 7 Best NFT Marketplaces You Should Know in 2024
D&G has not yet commented on the lawsuit. However, experts like Nick Jushchyshyn and Merav Ozair praised the innovation and foresaw a growing integration of luxury goods in the virtual world. As the NFT market matures, the industry must address these issues to maintain credibility and trust.
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