Yeah it got too popular and they had trouble filling the orders fast enough and got some complaints from impatient customers. A slight mishandling of things by the sounds of it but an understandable one. FYI Selling something you haven't yet built isn't a crime btw.
Them taking part in a competition with a $100,000 prize for getting the most sales in 6 months might go a long way to explaining why they didn't suspend orders once they realised they production capacity was lacking.
I think it is fair to accept money in advance, the customers were informed of the waiting time. The difficulty was that Google Checkout requires you to ship within 24hrs of accepting the order. I doubt it was an intentional violation of the TOU, it is likely at the time they read the TOU they didn't envision the situation they got into.
"Selling something you haven't yet built isn't a crime btw."
Wait what? Manufacturing companies do it every day. For a lot of them, their entire profit margin rides on the fact that their AP is on Net-90 and their AR is Net-60 (or similar). For stuff with long lead times, payment in fact does often happen before delivery. How is that illegal?
