The claim that backers have "no legal recourse" is a misstatement, but it doesn't change the de facto outcome. Ok, so Kickstarter says the creators are require

The claim that backers have "no legal recourse" is a misstatement, but it doesn't change the de facto outcome. Ok, so Kickstarter says the creators are required to refund upon failure. This provides legal recourse. So what? You can't take money from someone who has none. What are the chances that the project creator is sitting on the $10 million, or even a fraction of it? The problem for Kickstarter today is the same as it was on day one. Many of their customers believe that they are pre-ordering a product, not investing in a start-up. The Kickstarter ecosystem operates on confidence. I'm not sure anyone can accurately model that confidence economy, because Kickstarter is a very new idea. I can say this though: failed projects will erode confidence that must be rebuilt in order to obtain new backers. The rate of erosion versus build-up of new confidence levels will define the success or failure of Kickstarter over the long term, and I don't think it would be overstating to say that confidence tends to erode far more quickly than it can be built.