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Kickstarter project raised $196K and stopped responding

156 points by mkhaytman 13y ago

mkhaytman 13y ago
This project has been funded for a year and half with no progress to show for it, only thousands of comments from backers wondering when they will receive a refund or at least an update on whats going on. Unfortunately the project founder has flown the coop and kickstarter doesn't claim a lick of responsibility. Want to get away with stealing 200k? Just make a kickstarter project and never deliver, it's working for these guys.
- zokier 13y ago
  Are failed startup founders also stealing millions of VC money? KS is a risk-investment, not a preorder webshop.
  - srumple 13y ago
    But startup founders are accountable to the VCs. They have to provide updates and let the VCs know what it is they've been doing with the money. If the KS project fails, it fails. But to not provide some sort of update to backers is a serious problem.
    - mkhaytman 13y ago
      Yes, this was my main point here. It's difficult to get that across without writing an entire article for context, and now that ycombinator mods have edited the title its even less clear. The founders of this project did little more than sign on once in a while to say "its not ready yet, but should be ready soon". Now they've disappeared and there's no accountability for all that money. As an investor, I would at least like to learn from this experience and see where it went wrong and what could have done better. Instead the only lesson I can take away from this is don't trust strangers on the internet.
  - afterburner 13y ago
    It's always sad when scam artists are rewarded.
- princess3000 13y ago
  I was kind of wondering when this would happen. For a very small investment you could mockup a slick iPhone gadget, make 10x your initial request of $100k and then take the money and run. Aside from the morality of it, I don't think there are many legal obstacles to this, especially if you made it seem like you were making a "good faith" effort up until you disappeared with the cash.
  - joosters 13y ago
    Perhaps Kickstarter could insist that projects account for their spending on the project? e.g. if you've raised $100k, you'd better be able to show that you spent that $100k in ways that are related to the project, and not on a shiny new car. This would form part of the contract between project & funders and could open the way to lawsuits if the project couldn't demonstrate reasonable use of the cash. The mere threat of future legal problems would (hopefully) keep Kickstarters more honest, and would reassure funders, making them more likely to fund more stuff.
uptown 13y ago
I'm surprised this isn't a more-common outcome of things on Kickstarter. Seems like the perfect "market" to peddle vaporware without consequence.
- kamjam 13y ago
  I would be surprised if it doesn't become more common, it's too simple an "idea" for it not to become a big target for fraud.
- fuzzywalrus 13y ago
  After a few bad projects like this, Kickstarter now has the following disclaimer and new hardware guidelines "Product simulations are prohibited. Projects cannot simulate events to demonstrate what a product might do in the future. Products can only be shown performing actions that they’re able to perform in their current state of development. Product renderings are prohibited. Product images must be photos of the prototype as it currently exists." http://www.kickstarter.com/blog/kickstarter-is-not-a-store http://www.kickstarter.com/blog/kickstarter-is-not-a-store Also see: http://blogs.reuters.com/felix-salmon/2012/09/18/kickstarter-vaporware-of-the-day-lifx-edition/ http://blogs.reuters.com/felix-salmon/2012/09/18/kickstarter...
  - jlgreco 13y ago
    Product renderings are prohibited.. but I wonder if photographs of cleaned up 3d prints of those same files would be permitted.
    - Zenst 13y ago
      Bit like showing the full walkthru of a 3D modeled house all nicely rendered, without having actualy built the house type approach?
- fragsworth 13y ago
  This might be a serious problem already, but people are generally unaware of it. Kickstarter does not make it easy to find failed projects. And almost everyone who contributed to a project a year ago is likely enough to have forgotten about it by now. Even if they remember it, they have no way of rounding up all the other backers into an angry mob, except by posting on reddit or Hacker News.
enemtin 13y ago
This seems insane that Kickstarter doesn't have a policy on this. Guess all investments have some level of 'risk' to them.
- maxerickson 13y ago
  As far as I can tell, they basically want backers to be comfortable with 100% risk. I think this is a reasonable position.
  - k-mcgrady 13y ago
    If it's unreasonable people shouldn't back projects. The creator is also taking risk investing time and usually their own money into the project. If it fails they lose that investment and the backers lose their investment. Kickstarter needs to make it more clear to backers the risk involved and that they aren't pre-ordering anything. They are giving someone money and hoping they can successfully create something with it.
  - fragsworth 13y ago
    I think it's reasonable too, but something will inevitably change about this. Government always steps in to protect fools. Best case, I think, is we'll have some federal law requiring obvious and visible disclaimers on these sites that you might lose your money. Worst case, they impose some kind of transparency restrictions and rules on the developers.
- zokier 13y ago
  They do have a policy; a policy that keeps them away from legal trouble, a policy of non-involvement. What you are seeing is that policy at work.
- jdechko 13y ago
  True. And what if instead of disappearing, the company had simply tried (in good faith) and failed to deliver. The users would still be pissed off because they felt like they paid for something and the company didn't deliver. The big problem I see with Kickstarter is that both users & companies see it like a pre-order service. Too often it's used this way and people end up pissed. In the eyes of the backers, they aren't paying to see something new created. They're pre-ordering a product they think would be cool. If anything, kickstarter should enforce some sort of limits for perks to curb this sort of abuse.
will_brown 13y ago
Notwithstanding all the hype and legitimate positives of crowd sourcing, this is the very real negative side. Kickstarter gives unfettered access to funds, which more often than not is required by a given project, and they indemnify themselves and further remove themselves from the funding transactions (a legal requisite for anyone not wanting to be tied up in litigation for the rest of their known life). Perhaps there is some room to hold funds in escrow and release them after projects hit certain mile stones, but I think that would stifle projects more than ensure successful use of funds. This is a real problem facing an emerging industry that if someone figures out they could propel themselves to the forefront of this space.
- toomuchtodo 13y ago
  Looks like someone needs to start kickescrow.com
  - minimaxir 13y ago
    Which will then pivot into kickbitcoin.com
    - prodigal_erik 13y ago
      Oddly enough, it looks like bitcoin has an obscure feature (m-of-n transactions) which could be used for a group of arbiters (major backers?) to reach a consensus that a milestone has been reached and release funds for the next milestone. They could also use secret sharing to give the project the private key of a wallet with the funds.
    - bbit 13y ago
      or... http://www.BitcoinStarter.com http://www.BitcoinStarter.com ....
- jdechko 13y ago
  Maybe even only release 50% of the funds initially and hold the rest in escrow until a given set of circumstances are met. That way the users are exposed to less risk knowing they could get half of their funding back. On the downside, if this keeps happening, users aren't going to back as many projects, and fewer projects will be successfully funded (which may or may not actually be a bad thing).
jdechko 13y ago
Kickstarter is a in a tough position. I think it offers a valuable service (though it's certainly not unique). I'm sure that most people looking to get funded won't simply take the money & run as was done in this instance. Unfortunately, Kickstarter is the only one still hanging around, so they're left holding the bag, so to speak.
ipsin 13y ago
It's unfortunate that all the updates are Backer-Only, including a recent one titled "Refund Reminder". Could someone on HN who backed this project summarize what the company has said in its Backer-Only communication?
- reustle 13y ago
  I really wish kickstarter didn't hold project updates to backers only. I'd love to see some of the updates before I donate to a project.
  - batiudrami 13y ago
    It's the project creator's choice. They're frequently viewable by everyone.
quackerhacker 13y ago
All the projects resources went into the pitch video...not a cent went to R&D. Even though crowd sourcing is awesome in my opinion, just like any investment, it comes with a risk. Every purchase we make in life is an investment of some degree, in regards to kickstarter or indiegogo, a backer/customer/investor (whatever you'd like to call them), needs to weigh out risk/reward ratio, but also factor in the site's history of people delivering on their product.
UVB-76 13y ago
In the beginning, I thought these kind of incidents would be the end of the service. A lot of the people using Kickstarter to raise capital for their projects appear out of their depth, if not in the first instance, certainly when their project takes off and they end up raising many times what they anticipated.
k-mcgrady 13y ago
There is a simple solution to this problem. Don't allow project creators to offer the project as a reward! It should be ok for people to try and fail with projects on Kickstarter. By preventing creators from offering the product as a reward backers will understand better that it isn't a pre-order system. It's an "I need money for this idea. It might work or it might fail but if you want to help me try, give me money" system.
- fragsworth 13y ago
  I don't see how this solves the problem of accountability at all. All it can do, maybe, is mitigate the backlash from the backers a little bit?
  - akkartik 13y ago
    By setting expectations that there is none.
- mkhaytman 13y ago
  Unfortunately, this project creator hasn't provided any proof that the money was spent working on the product. If there were photos and records of work and progress being attempted, and at least some communication with the backers along the way, I suspect the tone and deposition of the comments would be different. It's a lot to read through, but there's pages of people just asking for transparency to see the status and to understand what challenges were coming up. There's just as many comments from the creator that things are going great and we should be ready to ship in no time at all. Trying out a new project or product and failing is one thing, never attempting it and running off with the cash is a different matter entirely.
  - k-mcgrady 13y ago
    I agree that they should be posting updates to prove the money is being put to use. However looking through the comments I see a number of people referring to the backing as a 'loan' and complaining they didn't get the product 'they ordered'. I think it's clear this 'company' has screwed people but backer expectations are also completely wrong and Kickstarter needs to solve that problem. People seem to think if they give you money and you fail they can get a refund. That's not how Kickstarter works/should work.
bbx 13y ago
The project has reached a $196K funding while the initial goal was "only" $12K. Maybe Kickstarter should limit the amount of money to this initial goal, or at least to twice the amount of this goal. If a project looks promising, more people are likely to pledge for it. But if Cryptrade thought $12K was enough to develop their project, that's probably all they actually needed. And $12K is both less tempting for Cryptrade to just disappear and less penalizing to everyone who pledged for the project.
- minimaxir 13y ago
  Since Kickstarter gets a 5% cut, they have no incentive to limit the amount of funding.
  - officemonkey 13y ago
    They have a huge incentive to keep backers comfortable with using Kickstarter. Too many "scamstarter" projects and it's their brand which takes the hit.
    - nightski 13y ago
      This makes no sense. If you are concerned, don't back a project that is already 100% funded...
      - nightski 13y ago
        I don't understand the down vote. People actively choose to back projects that are past 100% funding. This means they want to participate. Setting an arbitrary limit in order to protect people seems ridiculous when the information about funding levels is right there, in real time. How is contributing when the project is at 150% funding any more risky than when it is at 50%? You are still in for the same pledge amount.
        avalaunch 13y ago
        The only legitimate concern I could see is that by allowing projects to fund well over 100%, you're potentially increasing the risk to all backers as an easier to manage 12k project balloons into a very complex and potentially hard to manage 200k project.
famousactress 13y ago
I think the tricky situation here is one of positioning. Of course Kickstarter wants something as close to what a payments platform might get in terms of accountability for the transaction, but they're providing a curated marketplace for these projects. Closer to eBay or AirBnB... both of which have ended up with really similar challenges to tackle. At the very least it seems like it shouldn't be that challenging for them to at least be prepared to aggressively deal with flat-out fraud.
belorn 13y ago
Do kickstarter do any identification process when new projects are created?
jedahan 13y ago
It looks like they have posted an update on March 6, 2 months ago. Not very responsive but not as bad as the 3 years people think its been.
alexchamberlain 13y ago
Part of their description was the following... Is the Crypteks USB™ Patented? Definitely! Patents covering the unique locking mechanisms as well as iterations for future implementations of varying possible internal electronics have been filed with the USPTO with international coverage. Crypteks Inc. reserves all rights with respect to the use of Logos & Slogans as well as the design concepts and iterations covered under our patents Do these patents actually exist?
- imroot 13y ago
  Crypteks, Inc has a few patents (mainly dealing with network security), but nothing patented for the USB key. http://1.usa.gov/14l68Uj http://1.usa.gov/14l68Uj
  - UVB-76 13y ago
    Does that database display pending patents? It seems to me they are claiming to have patents pending.
    - wmf 13y ago
      I don't see any relevant applications in the database, but applications are only published ~18 months after filing so there may (barely) be some lurking.
Udo 13y ago
The expectations some people have about crowdfunding are unrealistic. It has to be clear from the start that when you donate money to those projects the money will be spent and the project might fail anyway. People have been using Kickstarter as a pre-order site which I think is not ideal in many cases. The option to preorder should be different from supporting a project in general, but Kickstarter sadly doesn't offer that kind of separation.
- pavel_lishin 13y ago
  A project failing and a project going completely silent are two different things.
  - Udo 13y ago
    I agree, but I'd say that a project being fraudulent or going silent is an expected failure mode.
- BurritoAlPastor 13y ago
  How do you mean, they don't offer that kind of separation? It's very easy to back a project without ordering the product; simply don't select a backer reward level when confirming your pledge.
  - Udo 13y ago
    I think those should probably be two separate steps for most projects. General funding to get the research going, making the prototype etc, then as a second step, allow the ordering of the actual product. There might be projects where this is unfeasible, but in general it would be good to separate the creation of the product and the manufacturing/distribution process. It would be safer for everyone involved, and for projects that fail during research - it would be clear that the money invested into this research is gone. At the same time, harsher measures should cover failure to follow through on actual orders.
    - BurritoAlPastor 13y ago
qdog 13y ago
Hmm, once having worked on a USB device that had encryption on it, it required an ARM chip and a circuit board running a custom software stack. Even if the creator thought they were going to create one of these, for their original target of 12k I don't think they had a clue about what they were doing.
hop 13y ago
Im a backer and they offered refunds twice to anyone that wanted it so I don't know why anyone is complaining. This project was before Kickstarter disallowed renderings (for good reason) and they would probably never have gotten to this shitty position if they had to actually prototype it and find out how insanely expensive it would be to manufacture.
- breadbox 13y ago
  The complaint says that they have not actually given out the offered refunds. Is that not true?
  - tekacs 13y ago
    See the project updates page[1] for an update called 'Refund Process' and indeed a 'Refund Reminder'. :/ [1]: http://www.kickstarter.com/projects/crypteks/crypteks-usbtm-encrypted-and-lockable-usb-solution/posts http://www.kickstarter.com/projects/crypteks/crypteks-usbtm-...
  - hop 13y ago
    I know they gave out a lot of refunds over the last year, looks like they stopped or ran out of money recently.
- alpb 13y ago
  OK so I'll launch a Kickstarter project, 10s of thousands of people will back me and I'll just say that I can refund their money after charging them. I think only several hundreds will request the refund, the rest is mine then?
  - tekacs 13y ago
    This seems rather unlikely (hyperbole, to be frank) - those using Kickstarter are surely aware of the nature of the platform, not thinking of it as a checkout. Unless the refund process is unduly complex, there doesn't seem to be an obvious reason why the vast majority of backers wouldn't ask for a refund.
run4yourlives 13y ago
I'm actually surprised it took this long for someone to "take the money and run". It seemed like one of the major issues with kickstarter, and I'm surprised they don't seem to have given it much thought.
- makomk 13y ago
  It didn't. Off-hand, HanFree and Lockpicks by Open Locksport are both confirmed to have taken the money and run by the project creator, and ZionEyez and a whole bunch of others have simply gone silent.
  - kalleboo 13y ago
    The Open Locksport guy had a mental breakdown and the project has been taken over by new management and it seems like they're making (slow) progress now.
mratzloff 13y ago
The video features F. Komaya, Product Development Director at Bitwize SARL and Lead Designer for Crypteks Inc. Bitwize is a web design company in Lebanon.[1] Sorry, but I'm not going to be sending money to someone in Lebanon no matter how good the CAD renders look. [1] http://www.linkedin.com/pub/bitwize-sarl/62/b19/256 http://www.linkedin.com/pub/bitwize-sarl/62/b19/256
- kissickas 13y ago
  Why not? I honestly have no idea what point you're making.
  - mratzloff 13y ago
    Hezbollah. But I was also under the (incorrect) assumption that if the project is in the US that I as a US citizen would be able to file a claim in small claims court across state lines in my own jurisdiction should the Kickstarter project owner fail to deliver on his end of the contract. A contract is largely useless if you have no practical recourse in the event of fraud.
maerF0x0 13y ago
Same thing happened to me with Window Farms, backed for $1k and they "cant afford shipping to canada" ... At this point I dont care though, at least they made the product and got it into the hands of the US backers.
lazyBilly 13y ago
A former acquaintance of mine (and noted scumbag) recently pulled this scam for a movie he made about (and with the backing of) a bunch of chiropractors. Raised over a quarter of a million dollars. He's since absconded with the funds to pay for his mansion/porsche, sent no dvds, and is now funding the sequel via Indiegogo. I have always admired the man's ability to sniff out a good con, although the second film is having quite a bit of trouble getting a similar level of traction. I'm sure he'll be fine-- it's hard enough to get the government involved in regular fraud, let alone... whatever dubious legal standing funding a Kickstarter has.
AlexDanger 13y ago
Does anyone keep a list of Kickstarter projects that went sour?
mvkel 13y ago
Kickstarter users should demand that Kickstarter realign their incentives for project success. As it stands now, Kickstarter has zero incentive to ensure a project succeeds; they make money on funding transactions and that's it. "Who cares if the project is vapor? We got our money." They could easily make an additional revenue stream out of it. Instead of just taking X% of each transaction, they can add an additional "delivered project" fee in exchange for more exposure on the homepage, social media channels, etc.

156 points by mkhaytman 13y ago

This project has been funded for a year and half with no progress to show for it, only thousands of comments from backers wondering when they will receive a refund or at least an update on whats going on. Unfortunately the project founder has flown the coop and kickstarter doesn't claim a lick of responsibility. Want to get away with stealing 200k? Just make a kickstarter project and never deliver, it's working for these guys.

zokier 13y ago
Are failed startup founders also stealing millions of VC money? KS is a risk-investment, not a preorder webshop.
- srumple 13y ago
  But startup founders are accountable to the VCs. They have to provide updates and let the VCs know what it is they've been doing with the money. If the KS project fails, it fails. But to not provide some sort of update to backers is a serious problem.
  - mkhaytman 13y ago
    Yes, this was my main point here. It's difficult to get that across without writing an entire article for context, and now that ycombinator mods have edited the title its even less clear. The founders of this project did little more than sign on once in a while to say "its not ready yet, but should be ready soon". Now they've disappeared and there's no accountability for all that money. As an investor, I would at least like to learn from this experience and see where it went wrong and what could have done better. Instead the only lesson I can take away from this is don't trust strangers on the internet.
- afterburner 13y ago
  It's always sad when scam artists are rewarded.
princess3000 13y ago
I was kind of wondering when this would happen. For a very small investment you could mockup a slick iPhone gadget, make 10x your initial request of $100k and then take the money and run. Aside from the morality of it, I don't think there are many legal obstacles to this, especially if you made it seem like you were making a "good faith" effort up until you disappeared with the cash.
- joosters 13y ago
  Perhaps Kickstarter could insist that projects account for their spending on the project? e.g. if you've raised $100k, you'd better be able to show that you spent that $100k in ways that are related to the project, and not on a shiny new car. This would form part of the contract between project & funders and could open the way to lawsuits if the project couldn't demonstrate reasonable use of the cash. The mere threat of future legal problems would (hopefully) keep Kickstarters more honest, and would reassure funders, making them more likely to fund more stuff.

uptown 13y ago

I'm surprised this isn't a more-common outcome of things on Kickstarter. Seems like the perfect "market" to peddle vaporware without consequence.

kamjam 13y ago
I would be surprised if it doesn't become more common, it's too simple an "idea" for it not to become a big target for fraud.
fuzzywalrus 13y ago
After a few bad projects like this, Kickstarter now has the following disclaimer and new hardware guidelines "Product simulations are prohibited. Projects cannot simulate events to demonstrate what a product might do in the future. Products can only be shown performing actions that they’re able to perform in their current state of development. Product renderings are prohibited. Product images must be photos of the prototype as it currently exists." http://www.kickstarter.com/blog/kickstarter-is-not-a-store http://www.kickstarter.com/blog/kickstarter-is-not-a-store Also see: http://blogs.reuters.com/felix-salmon/2012/09/18/kickstarter-vaporware-of-the-day-lifx-edition/ http://blogs.reuters.com/felix-salmon/2012/09/18/kickstarter...
- jlgreco 13y ago
  Product renderings are prohibited.. but I wonder if photographs of cleaned up 3d prints of those same files would be permitted.
  - Zenst 13y ago
    Bit like showing the full walkthru of a 3D modeled house all nicely rendered, without having actualy built the house type approach?
fragsworth 13y ago
This might be a serious problem already, but people are generally unaware of it. Kickstarter does not make it easy to find failed projects. And almost everyone who contributed to a project a year ago is likely enough to have forgotten about it by now. Even if they remember it, they have no way of rounding up all the other backers into an angry mob, except by posting on reddit or Hacker News.

enemtin 13y ago

This seems insane that Kickstarter doesn't have a policy on this. Guess all investments have some level of 'risk' to them.

maxerickson 13y ago
As far as I can tell, they basically want backers to be comfortable with 100% risk. I think this is a reasonable position.
- k-mcgrady 13y ago
  If it's unreasonable people shouldn't back projects. The creator is also taking risk investing time and usually their own money into the project. If it fails they lose that investment and the backers lose their investment. Kickstarter needs to make it more clear to backers the risk involved and that they aren't pre-ordering anything. They are giving someone money and hoping they can successfully create something with it.
- fragsworth 13y ago
  I think it's reasonable too, but something will inevitably change about this. Government always steps in to protect fools. Best case, I think, is we'll have some federal law requiring obvious and visible disclaimers on these sites that you might lose your money. Worst case, they impose some kind of transparency restrictions and rules on the developers.
zokier 13y ago
They do have a policy; a policy that keeps them away from legal trouble, a policy of non-involvement. What you are seeing is that policy at work.
jdechko 13y ago
True. And what if instead of disappearing, the company had simply tried (in good faith) and failed to deliver. The users would still be pissed off because they felt like they paid for something and the company didn't deliver. The big problem I see with Kickstarter is that both users & companies see it like a pre-order service. Too often it's used this way and people end up pissed. In the eyes of the backers, they aren't paying to see something new created. They're pre-ordering a product they think would be cool. If anything, kickstarter should enforce some sort of limits for perks to curb this sort of abuse.

will_brown 13y ago

Notwithstanding all the hype and legitimate positives of crowd sourcing, this is the very real negative side. Kickstarter gives unfettered access to funds, which more often than not is required by a given project, and they indemnify themselves and further remove themselves from the funding transactions (a legal requisite for anyone not wanting to be tied up in litigation for the rest of their known life). Perhaps there is some room to hold funds in escrow and release them after projects hit certain mile stones, but I think that would stifle projects more than ensure successful use of funds. This is a real problem facing an emerging industry that if someone figures out they could propel themselves to the forefront of this space.

toomuchtodo 13y ago
Looks like someone needs to start kickescrow.com
- minimaxir 13y ago
  Which will then pivot into kickbitcoin.com
  - prodigal_erik 13y ago
    Oddly enough, it looks like bitcoin has an obscure feature (m-of-n transactions) which could be used for a group of arbiters (major backers?) to reach a consensus that a milestone has been reached and release funds for the next milestone. They could also use secret sharing to give the project the private key of a wallet with the funds.
  - bbit 13y ago
    or... http://www.BitcoinStarter.com http://www.BitcoinStarter.com ....
jdechko 13y ago
Maybe even only release 50% of the funds initially and hold the rest in escrow until a given set of circumstances are met. That way the users are exposed to less risk knowing they could get half of their funding back. On the downside, if this keeps happening, users aren't going to back as many projects, and fewer projects will be successfully funded (which may or may not actually be a bad thing).

jdechko 13y ago

Kickstarter is a in a tough position. I think it offers a valuable service (though it's certainly not unique). I'm sure that most people looking to get funded won't simply take the money & run as was done in this instance. Unfortunately, Kickstarter is the only one still hanging around, so they're left holding the bag, so to speak.

ipsin 13y ago

It's unfortunate that all the updates are Backer-Only, including a recent one titled "Refund Reminder". Could someone on HN who backed this project summarize what the company has said in its Backer-Only communication?

reustle 13y ago
I really wish kickstarter didn't hold project updates to backers only. I'd love to see some of the updates before I donate to a project.
- batiudrami 13y ago
  It's the project creator's choice. They're frequently viewable by everyone.

quackerhacker 13y ago

All the projects resources went into the pitch video...not a cent went to R&D. Even though crowd sourcing is awesome in my opinion, just like any investment, it comes with a risk. Every purchase we make in life is an investment of some degree, in regards to kickstarter or indiegogo, a backer/customer/investor (whatever you'd like to call them), needs to weigh out risk/reward ratio, but also factor in the site's history of people delivering on their product.

UVB-76 13y ago

In the beginning, I thought these kind of incidents would be the end of the service. A lot of the people using Kickstarter to raise capital for their projects appear out of their depth, if not in the first instance, certainly when their project takes off and they end up raising many times what they anticipated.

k-mcgrady 13y ago

There is a simple solution to this problem. Don't allow project creators to offer the project as a reward! It should be ok for people to try and fail with projects on Kickstarter. By preventing creators from offering the product as a reward backers will understand better that it isn't a pre-order system. It's an "I need money for this idea. It might work or it might fail but if you want to help me try, give me money" system.

fragsworth 13y ago
I don't see how this solves the problem of accountability at all. All it can do, maybe, is mitigate the backlash from the backers a little bit?
- akkartik 13y ago
  By setting expectations that there is none.
mkhaytman 13y ago
Unfortunately, this project creator hasn't provided any proof that the money was spent working on the product. If there were photos and records of work and progress being attempted, and at least some communication with the backers along the way, I suspect the tone and deposition of the comments would be different. It's a lot to read through, but there's pages of people just asking for transparency to see the status and to understand what challenges were coming up. There's just as many comments from the creator that things are going great and we should be ready to ship in no time at all. Trying out a new project or product and failing is one thing, never attempting it and running off with the cash is a different matter entirely.
- k-mcgrady 13y ago
  I agree that they should be posting updates to prove the money is being put to use. However looking through the comments I see a number of people referring to the backing as a 'loan' and complaining they didn't get the product 'they ordered'. I think it's clear this 'company' has screwed people but backer expectations are also completely wrong and Kickstarter needs to solve that problem. People seem to think if they give you money and you fail they can get a refund. That's not how Kickstarter works/should work.

bbx 13y ago

The project has reached a $196K funding while the initial goal was "only" $12K. Maybe Kickstarter should limit the amount of money to this initial goal, or at least to twice the amount of this goal. If a project looks promising, more people are likely to pledge for it. But if Cryptrade thought $12K was enough to develop their project, that's probably all they actually needed. And $12K is both less tempting for Cryptrade to just disappear and less penalizing to everyone who pledged for the project.

minimaxir 13y ago
Since Kickstarter gets a 5% cut, they have no incentive to limit the amount of funding.
- officemonkey 13y ago
  They have a huge incentive to keep backers comfortable with using Kickstarter. Too many "scamstarter" projects and it's their brand which takes the hit.
  - nightski 13y ago
    This makes no sense. If you are concerned, don't back a project that is already 100% funded...
    - nightski 13y ago
      I don't understand the down vote. People actively choose to back projects that are past 100% funding. This means they want to participate. Setting an arbitrary limit in order to protect people seems ridiculous when the information about funding levels is right there, in real time. How is contributing when the project is at 150% funding any more risky than when it is at 50%? You are still in for the same pledge amount.
      - avalaunch 13y ago
        The only legitimate concern I could see is that by allowing projects to fund well over 100%, you're potentially increasing the risk to all backers as an easier to manage 12k project balloons into a very complex and potentially hard to manage 200k project.

famousactress 13y ago

I think the tricky situation here is one of positioning. Of course Kickstarter wants something as close to what a payments platform might get in terms of accountability for the transaction, but they're providing a curated marketplace for these projects. Closer to eBay or AirBnB... both of which have ended up with really similar challenges to tackle. At the very least it seems like it shouldn't be that challenging for them to at least be prepared to aggressively deal with flat-out fraud.

belorn 13y ago

Do kickstarter do any identification process when new projects are created?

jedahan 13y ago

It looks like they have posted an update on March 6, 2 months ago. Not very responsive but not as bad as the 3 years people think its been.

alexchamberlain 13y ago

Part of their description was the following... Is the Crypteks USB™ Patented? Definitely! Patents covering the unique locking mechanisms as well as iterations for future implementations of varying possible internal electronics have been filed with the USPTO with international coverage. Crypteks Inc. reserves all rights with respect to the use of Logos & Slogans as well as the design concepts and iterations covered under our patents Do these patents actually exist?

imroot 13y ago
Crypteks, Inc has a few patents (mainly dealing with network security), but nothing patented for the USB key. http://1.usa.gov/14l68Uj http://1.usa.gov/14l68Uj
- UVB-76 13y ago
  Does that database display pending patents? It seems to me they are claiming to have patents pending.
  - wmf 13y ago
    I don't see any relevant applications in the database, but applications are only published ~18 months after filing so there may (barely) be some lurking.

Udo 13y ago

The expectations some people have about crowdfunding are unrealistic. It has to be clear from the start that when you donate money to those projects the money will be spent and the project might fail anyway. People have been using Kickstarter as a pre-order site which I think is not ideal in many cases. The option to preorder should be different from supporting a project in general, but Kickstarter sadly doesn't offer that kind of separation.

pavel_lishin 13y ago
A project failing and a project going completely silent are two different things.
- Udo 13y ago
  I agree, but I'd say that a project being fraudulent or going silent is an expected failure mode.
BurritoAlPastor 13y ago
How do you mean, they don't offer that kind of separation? It's very easy to back a project without ordering the product; simply don't select a backer reward level when confirming your pledge.
- Udo 13y ago
  I think those should probably be two separate steps for most projects. General funding to get the research going, making the prototype etc, then as a second step, allow the ordering of the actual product. There might be projects where this is unfeasible, but in general it would be good to separate the creation of the product and the manufacturing/distribution process. It would be safer for everyone involved, and for projects that fail during research - it would be clear that the money invested into this research is gone. At the same time, harsher measures should cover failure to follow through on actual orders.
  - BurritoAlPastor 13y ago

qdog 13y ago

Hmm, once having worked on a USB device that had encryption on it, it required an ARM chip and a circuit board running a custom software stack. Even if the creator thought they were going to create one of these, for their original target of 12k I don't think they had a clue about what they were doing.

hop 13y ago

Im a backer and they offered refunds twice to anyone that wanted it so I don't know why anyone is complaining. This project was before Kickstarter disallowed renderings (for good reason) and they would probably never have gotten to this shitty position if they had to actually prototype it and find out how insanely expensive it would be to manufacture.

breadbox 13y ago
The complaint says that they have not actually given out the offered refunds. Is that not true?
- tekacs 13y ago
  See the project updates page[1] for an update called 'Refund Process' and indeed a 'Refund Reminder'. :/ [1]: http://www.kickstarter.com/projects/crypteks/crypteks-usbtm-encrypted-and-lockable-usb-solution/posts http://www.kickstarter.com/projects/crypteks/crypteks-usbtm-...
- hop 13y ago
  I know they gave out a lot of refunds over the last year, looks like they stopped or ran out of money recently.
alpb 13y ago
OK so I'll launch a Kickstarter project, 10s of thousands of people will back me and I'll just say that I can refund their money after charging them. I think only several hundreds will request the refund, the rest is mine then?
- tekacs 13y ago
  This seems rather unlikely (hyperbole, to be frank) - those using Kickstarter are surely aware of the nature of the platform, not thinking of it as a checkout. Unless the refund process is unduly complex, there doesn't seem to be an obvious reason why the vast majority of backers wouldn't ask for a refund.

run4yourlives 13y ago

I'm actually surprised it took this long for someone to "take the money and run". It seemed like one of the major issues with kickstarter, and I'm surprised they don't seem to have given it much thought.

makomk 13y ago
It didn't. Off-hand, HanFree and Lockpicks by Open Locksport are both confirmed to have taken the money and run by the project creator, and ZionEyez and a whole bunch of others have simply gone silent.
- kalleboo 13y ago
  The Open Locksport guy had a mental breakdown and the project has been taken over by new management and it seems like they're making (slow) progress now.

mratzloff 13y ago

The video features F. Komaya, Product Development Director at Bitwize SARL and Lead Designer for Crypteks Inc. Bitwize is a web design company in Lebanon.[1] Sorry, but I'm not going to be sending money to someone in Lebanon no matter how good the CAD renders look. [1] http://www.linkedin.com/pub/bitwize-sarl/62/b19/256 http://www.linkedin.com/pub/bitwize-sarl/62/b19/256

kissickas 13y ago
Why not? I honestly have no idea what point you're making.
- mratzloff 13y ago
  Hezbollah. But I was also under the (incorrect) assumption that if the project is in the US that I as a US citizen would be able to file a claim in small claims court across state lines in my own jurisdiction should the Kickstarter project owner fail to deliver on his end of the contract. A contract is largely useless if you have no practical recourse in the event of fraud.

maerF0x0 13y ago

Same thing happened to me with Window Farms, backed for $1k and they "cant afford shipping to canada" ... At this point I dont care though, at least they made the product and got it into the hands of the US backers.

lazyBilly 13y ago

A former acquaintance of mine (and noted scumbag) recently pulled this scam for a movie he made about (and with the backing of) a bunch of chiropractors. Raised over a quarter of a million dollars. He's since absconded with the funds to pay for his mansion/porsche, sent no dvds, and is now funding the sequel via Indiegogo. I have always admired the man's ability to sniff out a good con, although the second film is having quite a bit of trouble getting a similar level of traction. I'm sure he'll be fine-- it's hard enough to get the government involved in regular fraud, let alone... whatever dubious legal standing funding a Kickstarter has.

AlexDanger 13y ago

Does anyone keep a list of Kickstarter projects that went sour?

mvkel 13y ago

Kickstarter users should demand that Kickstarter realign their incentives for project success. As it stands now, Kickstarter has zero incentive to ensure a project succeeds; they make money on funding transactions and that's it. "Who cares if the project is vapor? We got our money." They could easily make an additional revenue stream out of it. Instead of just taking X% of each transaction, they can add an additional "delivered project" fee in exchange for more exposure on the homepage, social media channels, etc.