In a first, court fines operator of delayed Kickstarter campaign

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Oooh. Out of the dozens of campaigns I’ve pledged on, I’ve only had one funded kickstarter let me down… It would be nice to get some money back off them. Shame I don’t live in Washington State.

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What’s crazy is that an even bigger scam to the tune of over $1 million goes unprosecuted - John Popaduik, a pinball designer in the 90’s, took deposits or full payment for a game he said he’d make and five years later hasn’t produced anything. There are people who paid over $30K each for one of his proposed games, and he’s going to get off scott free.

Do we need special laws to cover “pre-order fraud”?


I’m curious to know if the cards lived up to the hype.

I don’t know whether this is a bad precedent for crowdfunding, or a good thing. A couple of things I’ve crowdfunded have gone way over their time budgets and I’m okay with that.

Anyone pledging money in crowdfunding should recognize the risk. But it would be nice if misuse of funds and plain old fraud could be squashed.


Well I’m curious about the totality of the circumstances. If I tell you I have a great investment opportunity and you give me $5k, then I lose it all on the stock market, then you made a bad decision giving me your money. If I merely tell you I lost it all and keep the money, then I’m committing fraud. I’m not sure what tipped the balance to have charges laid.

On the whole, the idea that you could be charged if you didn’t deliver on time in general would be very bad for crowd funding. The idea that you can’t intentionally cheat people is good.


The question is - what about cases where people just seriously misjudge how much money they actually need to get things up and running, and run out of money? I’m all for going after proper fraudsters, or people who get a huge kickstarter and then go throw a huge party for their friends… But how do you tell the difference between the situations like the latter, and the former? I haven’t been able to find any real details in this particular situation. If you run out of money, at what point are you allowed to give up on your endeavour and tell investors “Sorry, I thought I could do it, but it turns out I couldn’t? I failed miserably.” Maybe the problem is that in this situation, the project didn’t actually say that? They just disappeared?


When I looked at this, at least some people commenting said they’d received the cards.

So is the project a scam, or just badly managed?

I don’t think Kickstarter should have that bit about people being guaranteed what they pledge for. It should be clearly advertized as patronage. I think I am largely going to stick to funding arts stuff from here on and staying away from what are basically pre-orders for technology. Particularly the ones where the Kickstarter is going to basically be the entire production run.

I’ve backed a few things. Some good, some bad, most indifferent, almost all late.

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They don’t, at least they didn’t the last time I checked.


Yup, it’s right there in the “Accountability” section of their FAQ:

Following up with their Terms of Use (which, granted, nobody reads), it’s made pretty explicit what a creator is required to do if they can’t complete a project:


There is a requirement to fulfill pledge rewards, and the way most Kickstarters now work is that the projects that people are pledging to support are part of the rewards. Previously, that wasn’t usually the case, but now people are seeing it as a pre-order system, and that’s how it’s mostly being treated. Kickstarter campaigners can protect themselves by not offering the thing they’re raising money for as a reward, but then they wouldn’t get any support.

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But right from the quoted text:

Right there it says what to do if rewards have not been sent - return unused funds proportional to the donation. If A donated $50 and B donated $10 and I tried my best to make the project but failed to produce anything with $6 left, then I offer A $5 back and B $1 back and that’s that. That’s what the terms of use says. This could happen for any number of reasons. If those reasons are that the creator shoved the other $54 in their pocket than that’s fraud. If those reasons are that the creator severely misjudged the cost of the project and ended up running out of money before they actually got to produce a tangible thing to send out, that’s just caveat donator.

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Kickstarter has issued some “clarifications” in the last year or so where they emphasized that people who set up campaigns were liable for shipping promised rewards, period. We also have the real-world case of someone who failed to fulfill their rewards (which included the product they were trying to have made) because they used up all the funds developing the project. They were sued, with the end result being that they were expected to fully refund peoples’ pledges, which drove them into bankruptcy. So I’d say that paying back the remaining portion of the money collected wouldn’t necessarily be sufficient, especially in light of what’s happened in Washington.

It’s weird that they issued those clarifications, but never bothered to update their TOS. Could you point out some of those clarifications? I can’t seem to Google-fu my way to them tonight.

does is count as a “delayed” campaign when there’s no evidence the guy behind it actually planned on following through at all? /none/ of the rewards delivered, no contact, nothing?

I’ve read various statements by Kickstarter on third-party sites when they were released, but never been able to find them on Kickstarter’s own site, which seems to be really bad about making the information about how Kickstarters are supposed to work accessible…

Well, I guess the moral is that individuals shouldn’t launch kickstarters, but should start corporations to launch kickstarters.

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And if they haven’t updated the TOS, I’m not sure they would really have a leg to stand on, legally. “We clarified this on X 3rd party site” doesn’t really cut it if you actually did everything exactly as stated in the TOS.

After the lawsuit, that was my response… I think a lot of well-meaning Kickstarter campaigners are opening themselves up to some pretty bad liability. This seems especially true for the video game Kickstarters. No one ever raises enough funds to pay living wages for the developers, even when they raise large sums of money. They rely on outside funds to various degrees, usually the developers using their own savings to support themselves, so when someone on the team has to go and get a paying job because of changed life circumstance, they don’t have the funds to actually hire a replacement. A number of campaigns have been cut short because of this, and mostly the backers are pretty understanding. But there’s sometimes talk of lawsuits, and the team sending full refunds to those who ask for them, even in one case where technically the group fulfilled their pledge rewards, but backers thought the game should be bigger…

Since Kickstarter itself makes no efforts to enforce the TOS, I’m not sure how relevant they even are… I’m pretty sure the previous statements were somewhere on their site, even if I couldn’t find them; they just seemed to be badly organized.

I guess if I was ever sued (not that I ever plan on starting a Kickstarter), the first thing I would point to would be the TOS, and I would say “I have done everything on that list, and operated in good faith”. I can see forcing people to follow through if the project actually finishes, but they simply don’t have enough money left to deliver the rewards… But the whole point of Kickstarter is that it’s not a pre-order system, despite what people think, and that there is some inherent risk involved that the project may simply just not get finished.

Except that’s where most of their money comes from, so they won’t stop the projects being run that way.

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