Kickstarter - Court orders Payment for Failed Delivery

Myrthos

Myrthos

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A Washington State court orders a Kickstarted game creator to pay $54k for failing to deliver.

For the first time, a Kickstarter campaign has been ordered by a state court to pay restitution and civil penalties for failing to deliver rewards to its backers. The judgment, filed July 22 in Washington state, sets a precedent there that companies and individuals who accept money through crowdfunding are beholden to deliver on their promises.

"Washington state will not tolerate crowdfunding theft," said Washington's attorney general Bob Ferguson in a press release issued July 27. "If you accept money from consumers, and don’t follow through on your obligations, my office will hold you accountable."

Polygon previously reported that in April of 2014 Ferguson filed suit against Edward J. Polchlopek III, also known as Ed Nash, and his Nashville, Tenn.-based Altius Management, for failing to deliver products to the backers of the Asylum Playing Card campaign. The playing cards, designed by a Serbian artist, were to be an exclusive printing delivered by Dec. 2012.

The campaign, launched by Altius in in Sept. 24, 2012, promised backers at the $9 level a single deck of playing cards. Backers at other levels were to receive signed original art and other perks. The campaign was successfully funded on Oct. 31, receiving $25,146 on a $15,000 ask.

The expected shipping date passed without backers receiving anything.
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More information.
 
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Seems like some people actually received their decks going by the Kickstarter comments section.

How will that $54k be split anyway? Everyone who got their stuff aren't entitled to it and that's twice the amount the KS crowdfunded for. Who wanna bet it's all going into the lawyer's pocket.
 
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It doesn't matter. As long as people are kept accountable, there will be less scammers. I love Kickstarter, but it is clear that some 'developers' took advantage of people there. It is a good precedent.
 
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mbpopolano24 said:
It doesn't matter. As long as people are kept accountable, there will be less scammers. I love Kickstarter, but it is clear that some 'developers' took advantage of people there. It is a good precedent.
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I agree.
 
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Kickstarter needs to be accountable for the losses too because they shamelessly profit from the scams and look the other way while they still pocket and keep 10% of people's money.
 
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Humanity has risen! said:
Kickstarter needs to be accountable for the losses too because they shamelessly profit from the scams and look the other way while they still pocket and keep 10% of people's money.
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I think at best they should have to refund the 10% to the backers account...
 
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Star Citizen might want to watch out - they are way beyond their promised reward date, and there are already rumblings. That lawsuit would be a monster.
 
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Star Citizen? I'm more worried about the stretch goals that didn't show up in Divinity: OS.
 
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sets a precedent there that companies and individuals who accept money through crowdfunding are beholden to deliver on their promises.
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Yes, just as the Kickstarter terms of service have always obligated a project to do.
 
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They'll sort *themselves* out.

The entire future of their platform depends on people feeling that there is some safety in contributing to projects that are featured on their site and the only way to do that is stop taking a hands off "steam (lack of) curation" approach. They need to start vetting that companies/people are legitimate and do *something -- anything* when they fail and refuse to provide refunds when they can't provide promises rewards (as the kickstarter ToS requires creators of projects to do).

If they continue to fail at this, people will slowly determine that it is too much of an unknown quantity and not bother. Even eBay had to find a way to provide more reliable transaction methods and safe-harbor promises to ensure buyers.
 
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Kickstarter just provides a platform for collecting funds and advertising the campaign. They aren't the ones who have ripped off the backer - that's the people running the campaign.

Kickstarter is no more responsible for a campaign that doesn't deliver than Ebay is for a bad auction, Paypal is for transferring the money on a bad sale, or a newspaper is for posting a classified ad. It would be impossible for Kickstarter to enforce the commitments of every campaign using their service. When a campaign owner fails to deliver, they should be held responsible for all funds collected from the backers, to include whatever fees they had to pay to Kickstarter or anyone else.
 
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Ripper said:
Star Citizen might want to watch out - they are way beyond their promised reward date, and there are already rumblings. That lawsuit would be a monster.
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For theft to happen, money most not be refundable and CIG allowed for refunds. Delays have never been the issues those lawsuits where fighting.

edit:
Also, the CIG website TOS is not the Kickstarter TOS. They only got ~2 millions from KS, everything else is from CIG website. Anyway, the KS TOS support delays and even product changes as long as the creator explain why (which CIG does every months in its monthly reports).
 
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Bob's use of the words "crowdfunding theft", in my opinion, appears to be very emotional.

I think that there is a difference between theft and poor management of the project. In UK law theft is defined as the intention of taking some-one else's property with the objective of depriving them of it permanently. In this case it seems to suggest that we have a "civil" action not a "criminal" action.

I am not suggesting that there isn't any criminal activity under the guise of KS funding but late delivery is not a crime.
 
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Are we going to see also sentences for regular not kickstarter games that get published unfinished and never get fixed and never return peorders? Isn't that wide spread policy the real scam?

That's what should be taken seriourly by courts, not kickstarter, which ultimately is a tool where you're just helping someone to make his project but have no warranty that it will be a success or not. The published games on the other hand is what is making the gaming industry so miserable these days, and where you rights as a consumer should be defended.
 
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azarhal said:
For theft to happen, money most not be refundable and CIG allowed for refunds. Delays have never been the issues those lawsuits where fighting.

edit:
Also, the CIG website TOS is not the Kickstarter TOS. They only got ~2 millions from KS, everything else is from CIG website. Anyway, the KS TOS support delays and even product changes as long as the creator explain why (which CIG does every months in its monthly reports).
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Like SleepingDog mentioned, this is a civil case, and the question of theft doesn't really enter into it - that was just the choice of words the judge pulled out in his summary. I think the question is when does a court consider that a delay has become a failure to deliver - they will eventually draw a line.

For Star Citzen, they have a couple of problems (I should add, I don't have a problem with them, but legal proceedings have already started.). For starters, you have to be very careful when putting together a contract, because if the court deems the terms to be unreasonable, or violating stautory rights, they will strike it down.

Also, in their contract, they have two mutually contradictory terms:

IV. Charges & Billing
“RSI agrees to use its good faith business efforts to deliver to you the pledge items and the Game on or before the estimated delivery date. However, you acknowledge and agree that delivery as of such date is not a promise by RSI since unforeseen events may extend the development and/or production time. Accordingly, you agree that any unearned portion of the deposit shall not be refundable until and unless RSI has failed to deliver the pledge items and/or the Game to you within 12 months after the estimated delivery date.”
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That 12 months before refund claims will be up in November. But another clause says:

VII. Fundraising & Pledges
“For the avoidance of doubt, in consideration of RSI’s good faith efforts to develop, produce, and deliver the Game with the funds raised, you agree that any Pledge amounts applied against the Pledge Item Cost and the Game Cost shall be non-refundable regardless of whether or not RSI is able to complete and deliver the Game and/or the pledge items. In the unlikely event that RSI is not able to deliver the Game and/or the pledge items, RSI agrees to post an audited cost accounting on the Website to fully explain the use of the amounts paid for Pledge Item Cost and the Game Cost. In consideration of the promises by RSI hereunder, you agree that you shall irrevocably waive any claim for refund of any Pledge that has been used for the Game Cost and Pledge Item Cost in accordance with the above.”
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This contradicts the idea of a 12 month deadline before refunds, and essentially says that you have no claim if they fail to deliver what you paid for. When you have a contradiction in a contract, the terms most favourable to the party that did not draft it are enforced. Also, the idea of a contract that says they may never deliver what you paid for is very unlikely to stand up, in general.
 
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