Dolce & Gabbana (D&G) faces backlash over failed fashion venture in the metaverse.

A customer has sued the luxury brand, alleging significant financial losses due to mismanagement of its non-fungible token (NFT) offerings.

Late NFT deliveries lead to huge losses

Luke Brown filed suit against D&G on May 16 in Manhattan federal court, alleging 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 late deliveries and unfulfilled promises, assets lost 97% of their value.

Marketed as part of the DGFamily collection, NFTs were supposed to offer exclusive rewards and events but faced significant delays. Brown lost $5,800 and filed the lawsuit on behalf of the affected buyers.

“Their standard operating procedure has been to promise products they fail to deliver, before abandoning a project and a community they promised to support,” Brown’s lawyers wrote.

Dolce & GabbanaThe company’s involvement with NFTs hasn’t 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 complex designs and included digital and physical items.

However, 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 is still a wild and free industry where scams and money grabbing is everywhere. This makes people very suspicious and much more rigorous in the purchases they make. Dolce & Gabbana is certainly capable of restoring its reputation, but it would require refunds from existing holders with airdrops and doing everything they can to add value to their existing NFTs before launching a new collection,” founder of Somnia Network Paulo Tomás told BeInCrypto.

Legal Action Highlights Market Risks

Legal disputes over non-fungible tokens are not uncommon. For example, Hermes recently won a case 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 of 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 main thing is not to sell these goods as investments or assets to be purely speculated on in price. Keeping the NFT as an association or linked to usable digital items can help the brand avoid regulatory concerns. Also working with reputable partners to help bring your projects to market in a compliant manner can help brands avoid the legal hurdles that digital assets pose,” advised Thomas.

In addition to these circumstances, the market has been in recession, with trading volumes falling down by 30% in April.

See more information: 7 Best NFT Marketplaces You Should Know About in 2024

Global NFT sales volume. Source: CryptoSlam

D&G has not yet commented on the process. However, experts such as Nick Jushchyshyn and Merav Ozair praised the innovation and predicted an increasing integration of luxury goods into the virtual world. As the NFT market matures, the industry must address these issues to maintain credibility and trust.

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