Payments startup Coin Inc. has weathered challenges since its splashy crowd-funded launch in 2013, and now it’s got a new one: A lawsuit claiming the all-in-one payment card product didn’t live up to its initial promises.

A San Francisco law firm has filed a class-action lawsuit alleging Coin used false advertising in its video promoting the product, promising that users could consolidate all their credit and debit account information on a single, plastic card. The lawsuit, filed by Kronenberger Rosenfeld LLP, demands a jury trial and also seeks monetary damages for misrepresentation and breach of contract.

According the lawsuit, customers who bought the product based on the video, “One Coin for All Your Cards,” discovered that their Coin devices failed to work at payment terminals 15% to 40% of the time.

Coin also failed to alert consumers when the device was out of range of their smartphone, the lawsuit contends. Coin is designed so that when users pair Coin with their phone, the card stops working if it loses contact with the phone for a certain amount of time or if the phone’s battery dies.

“Our complaint alleges that Coin knowingly marketed a product that it knew could not work the way they said it would,” said Karl Kronenberger, lead attorney in the case.

Coin, also based in San Francisco, launched in November 2013 via a Kickstarter campaign and reached its target of 1,000 pre-orders within 40 minutes, with the lure that the initial price of $50 would go up to $100 when the company reached its goal.

Coin faced challenges meeting demand at first, and last year the company conquered another problem by adding an EMV (chip-and-PIN) feature to its magnetic stripe technology, aligning it with the U.S. chip-card migration that began with the Oct. 1, 2015 EMV liability shift.  

Separately, Coin recently signaled a pivot in its business strategy by announcing a collaboration with MasterCard to use Coin’s hardware in various MasterCard wearable devices with payments capabilities. MasterCard and Coin plan to roll out the jointly developed products later this year.

Coin did not return a request for comment by deadline.

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