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Right on the Kickstarter FAQ page- "Is a creator legally obligated to fulfill the promises of their project? Yes. Kickstarter's Terms of Use require creators

Right on the Kickstarter FAQ page- "Is a creator legally obligated to fulfill the promises of their project? Yes. Kickstarter's Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill." https://www.kickstarter.com/help/faq/kickstarter+basics?ref=help_nav https://www.kickstarter.com/help/faq/kickstarter+basics?ref=...

iandanforth 13y ago
Kickstarter doesn't get to make law. Just because a TOS says you're legally obligated to do something doesn't mean you are. In fact given the very public nature of kickstarter's failures, and their own disclaimers about the risk associated with backing a campaign, it will be extremely difficult to make the case that this falls under standard consumer protection laws. You're not making a purchase, your taking a risk to finance a project. That is the entire and sole point of kickstarter.
- MichaelApproved 13y ago
  They're not making law, they're facilitating contractual obligations between the creator and the backer. Backer gives creator money, creator agrees to a contractual obligation to fulfill that promise. Nothing new here.
  - iandanforth 13y ago
    Contract law, fine. But this is the consumer protection act specifically http://apps.leg.wa.gov/rcw/default.aspx?cite=19.86.020 http://apps.leg.wa.gov/rcw/default.aspx?cite=19.86.020. My argument is that there is ample proof that kickstarter is not engaged in trade and commerce relevant to this law. For example "It's hard to know how many people feel like they're shopping at a store when they're backing projects on Kickstarter, but we want to make sure that it's no one." - https://www.kickstarter.com/blog/kickstarter-is-not-a-store https://www.kickstarter.com/blog/kickstarter-is-not-a-store . The fundamental nature of speculative projects is that they can fail. If this case goes forward and is found against the creators for reasons other than explicit fraudulent activity with no attempt whatsoever to complete the project then it will be terrible law and undermine kickstarter completely.
    - Guvante 13y ago
      You should look at the case involved before commenting on the legitimacy of the case. From the Kickstarter comments. > There were tons of backers investigating the life of ~REDACTED~ and his company Altius Management, especially after the artist reached out and told us that he never got a cent, and the US Playing Card Company said that they had never heard of the guy. This was a case of selling customized playing cards through a well known company, it was a very low risk venture and he failed to make (assuming that quote is accurate) even minimal attempts to create what he started the Kickstarter for. This wasn't even a "we screwed up and decided to give up early" it was a "lol thanks for the free $25k".
      - iandanforth 13y ago
        No, no, no. I agree with you. Fraud is fraud, I'm just saying this is the wrong law to use, and the outcome a successful prosecution under this law is uniquely troublesome for kickstarter.
        dragonwriter 13y ago
        How is it the wrong law to use? It seems to be exactly the law designed to address the kind of commercial fraud alleged. The troubling thing for kickstarter is a result of the fact that kickstarter bothv wants buyers not to see backing a project as a simple pre-order but simultaneous wants to create exactly the kind of obligation that exists with a pre-order and use it to reassure backers. (And given that that is the only thing backers get, there's pretty much no way for kickstarter to work without getting downed in outright take the money and run scheme without that kind of obligation.)
        pessimizer 13y ago
        It's not fraud because Kickstarter is not a store? The project creator made a promise to deliver. I'm not sure how Kickstarter's TOS (repeating that they have a responsibility to deliver, but that Kickstarter isn't a party to the contract and can't enforce it) immunizes them against their own obligations. I've sold things on message boards, which are also not stores. If I didn't deliver, why shouldn't I be prosecuted under the same law?
- ben0x539 13y ago
  I can't believe people actually have this understanding of kickstarter. Maybe I've been living in a bubble, but my understanding has always been that you are basically preordering something, insofar as you're entering a contract with the party running the kickstarter involving their obligation to deliver the backer rewards. I don't think something like that needs a TOS to rewrite the law. Sure, there is a risk that the project fails and doesn't deliver, just like there's a risk that whatever company goes bankrupt between you preordering something and them finishing and shipping it.
  - eternalban 13y ago
    My understanding has always been that you are, in effect, taking a risk on a development project. It's not a crowd purchasing system, it is a crowd funding system. The TOS terms of service seem to allude to this given the "best effort" qualification.
- dragonwriter 13y ago
  > Kickstarter doesn't get to make law. Just because a TOS says you're legally obligated to do something doesn't mean you are. When someone makes a conditional offer to you of something of value, and you accept it, and you accept that conditional offer, its not the offering party making law that makes it binding, its this thing called "contract law". > In fact given the very public nature of kickstarter's failures, and their own disclaimers about the risk associated with backing a campaign, it will be extremely difficult to make the case that this falls under standard consumer protection laws. The "in fact" claim here would be a lot more convincing if your post actually referenced even a single way in which "the very public nature of kickstarter's failures" or their disclaimers had any bearing on the applicability of "standard consumer protection laws"; or, more to the point, the specific consumer protection laws at issue in the instant case. > You're not making a purchase, your taking a risk to finance a project. While financing projects is certainly the uniting theme of Kickstarter offers, the actual terms seem to me very much like an advance purchase conditioned on sufficient volume of commitments, and if it were legally treated as anything differently, it would be an easy place to do take the money and run schemes that are the exact kind of fraud that many consumer protection laws are designed to prevent. There may be something in the relevant terms, etc., that courts would find warrants substantially different treatment -- but I've yet to see a convincing argument made of a specific, relevant distinction.
crazy1van 13y ago
I think there's a difference between being in breach of a legal contract which opens your company up to civil suit versus being criminally culpable.
zaroth 13y ago
Section 4.9 of the complaint specifically calls out this statement in Kickstarter's TOS. I believe it underpins the entire legal action, because if backers reasonably understand the project could fail and they would get neither reward NOR a refund, then the burden of proof on the state increases enormously.
arrrg 13y ago
I can’t help but think that this is the wrong approach by Kickstarter. I think it should only be possible to ask for refunds if the creator doesn’t make a good faith effort. I understand that Kickstarter wants to draw a clear and unambiguous line, but I also think that one of things that makes Kickstarter great is the potential for failure. It’s not just a boring pre-order service – or at least I don’t want it to be, at least not exclusively. The potential for failure is already the current reality of Kickstarter but I always feel as though they try to absolve themselves from it. I think they should instead communicate it offensively. Kickstarter can remain a place for boring pre-orders (those projects can be awesome, too, e.g. Smut Peddler). However, Kickstarter could also create a clearly marked higher risk type of project. The product doesn’t exist at the start of the funding period (either completely or nearly completely). Kickstarter could require creators to be more transparent with their budget. Maybe there could also be a, say, $2,500 ceiling for each individual backer or something like that. But Kickstarter could also allow for failure without refunds. I think all of this is doable. People who don’t like risk can still back low-risk pre-order Kickstarters, people who enjoy backing something that could fail can do just that. (That being said, the linked project appears to have been fraudulent and no good faith effort appears to have been made, so it’s certainly appropriate to get the courts involved.)
- forgottenpass 13y ago
  I can’t help but think that this is the wrong approach by Kickstarter. I think it should only be possible to ask for refunds if the creator doesn’t make a good faith effort. The creator can just not offer rewards. Or small no-risk rewards that are worthless but let the backer enjoy the fact they backed. If that isn't enough to encourage someone to back, that's tacit admission that they're backing to "buy" the reward.
  - arrrg 13y ago
    Hm, yeah, right, didn’t really look at it from that angle. However, I’m not sure how well that would work. I mean, I would personally have no problem with conditional rewards. (I backed Broken Age and I would have no problem with the reward being “Access to our documentary episodes of the making of the game and the game if we manage to finish it”.) I’m backing to get the reward, of course, but I accept that the project might fail and that I might not get a reward. I have no problem with that. But if the creators actually manage to make something in the end I would still like to get that thing automatically.

iandanforth 13y ago

Kickstarter doesn't get to make law. Just because a TOS says you're legally obligated to do something doesn't mean you are. In fact given the very public nature of kickstarter's failures, and their own disclaimers about the risk associated with backing a campaign, it will be extremely difficult to make the case that this falls under standard consumer protection laws. You're not making a purchase, your taking a risk to finance a project. That is the entire and sole point of kickstarter.

MichaelApproved 13y ago
They're not making law, they're facilitating contractual obligations between the creator and the backer. Backer gives creator money, creator agrees to a contractual obligation to fulfill that promise. Nothing new here.
- iandanforth 13y ago
  Contract law, fine. But this is the consumer protection act specifically http://apps.leg.wa.gov/rcw/default.aspx?cite=19.86.020 http://apps.leg.wa.gov/rcw/default.aspx?cite=19.86.020. My argument is that there is ample proof that kickstarter is not engaged in trade and commerce relevant to this law. For example "It's hard to know how many people feel like they're shopping at a store when they're backing projects on Kickstarter, but we want to make sure that it's no one." - https://www.kickstarter.com/blog/kickstarter-is-not-a-store https://www.kickstarter.com/blog/kickstarter-is-not-a-store . The fundamental nature of speculative projects is that they can fail. If this case goes forward and is found against the creators for reasons other than explicit fraudulent activity with no attempt whatsoever to complete the project then it will be terrible law and undermine kickstarter completely.
  - Guvante 13y ago
    You should look at the case involved before commenting on the legitimacy of the case. From the Kickstarter comments. > There were tons of backers investigating the life of ~REDACTED~ and his company Altius Management, especially after the artist reached out and told us that he never got a cent, and the US Playing Card Company said that they had never heard of the guy. This was a case of selling customized playing cards through a well known company, it was a very low risk venture and he failed to make (assuming that quote is accurate) even minimal attempts to create what he started the Kickstarter for. This wasn't even a "we screwed up and decided to give up early" it was a "lol thanks for the free $25k".
    - iandanforth 13y ago
      No, no, no. I agree with you. Fraud is fraud, I'm just saying this is the wrong law to use, and the outcome a successful prosecution under this law is uniquely troublesome for kickstarter.
      - dragonwriter 13y ago
        How is it the wrong law to use? It seems to be exactly the law designed to address the kind of commercial fraud alleged. The troubling thing for kickstarter is a result of the fact that kickstarter bothv wants buyers not to see backing a project as a simple pre-order but simultaneous wants to create exactly the kind of obligation that exists with a pre-order and use it to reassure backers. (And given that that is the only thing backers get, there's pretty much no way for kickstarter to work without getting downed in outright take the money and run scheme without that kind of obligation.)
      - pessimizer 13y ago
        It's not fraud because Kickstarter is not a store? The project creator made a promise to deliver. I'm not sure how Kickstarter's TOS (repeating that they have a responsibility to deliver, but that Kickstarter isn't a party to the contract and can't enforce it) immunizes them against their own obligations. I've sold things on message boards, which are also not stores. If I didn't deliver, why shouldn't I be prosecuted under the same law?
ben0x539 13y ago
I can't believe people actually have this understanding of kickstarter. Maybe I've been living in a bubble, but my understanding has always been that you are basically preordering something, insofar as you're entering a contract with the party running the kickstarter involving their obligation to deliver the backer rewards. I don't think something like that needs a TOS to rewrite the law. Sure, there is a risk that the project fails and doesn't deliver, just like there's a risk that whatever company goes bankrupt between you preordering something and them finishing and shipping it.
- eternalban 13y ago
  My understanding has always been that you are, in effect, taking a risk on a development project. It's not a crowd purchasing system, it is a crowd funding system. The TOS terms of service seem to allude to this given the "best effort" qualification.
dragonwriter 13y ago
> Kickstarter doesn't get to make law. Just because a TOS says you're legally obligated to do something doesn't mean you are. When someone makes a conditional offer to you of something of value, and you accept it, and you accept that conditional offer, its not the offering party making law that makes it binding, its this thing called "contract law". > In fact given the very public nature of kickstarter's failures, and their own disclaimers about the risk associated with backing a campaign, it will be extremely difficult to make the case that this falls under standard consumer protection laws. The "in fact" claim here would be a lot more convincing if your post actually referenced even a single way in which "the very public nature of kickstarter's failures" or their disclaimers had any bearing on the applicability of "standard consumer protection laws"; or, more to the point, the specific consumer protection laws at issue in the instant case. > You're not making a purchase, your taking a risk to finance a project. While financing projects is certainly the uniting theme of Kickstarter offers, the actual terms seem to me very much like an advance purchase conditioned on sufficient volume of commitments, and if it were legally treated as anything differently, it would be an easy place to do take the money and run schemes that are the exact kind of fraud that many consumer protection laws are designed to prevent. There may be something in the relevant terms, etc., that courts would find warrants substantially different treatment -- but I've yet to see a convincing argument made of a specific, relevant distinction.

crazy1van 13y ago

I think there's a difference between being in breach of a legal contract which opens your company up to civil suit versus being criminally culpable.

zaroth 13y ago

Section 4.9 of the complaint specifically calls out this statement in Kickstarter's TOS. I believe it underpins the entire legal action, because if backers reasonably understand the project could fail and they would get neither reward NOR a refund, then the burden of proof on the state increases enormously.

arrrg 13y ago

I can’t help but think that this is the wrong approach by Kickstarter. I think it should only be possible to ask for refunds if the creator doesn’t make a good faith effort. I understand that Kickstarter wants to draw a clear and unambiguous line, but I also think that one of things that makes Kickstarter great is the potential for failure. It’s not just a boring pre-order service – or at least I don’t want it to be, at least not exclusively. The potential for failure is already the current reality of Kickstarter but I always feel as though they try to absolve themselves from it. I think they should instead communicate it offensively. Kickstarter can remain a place for boring pre-orders (those projects can be awesome, too, e.g. Smut Peddler). However, Kickstarter could also create a clearly marked higher risk type of project. The product doesn’t exist at the start of the funding period (either completely or nearly completely). Kickstarter could require creators to be more transparent with their budget. Maybe there could also be a, say, $2,500 ceiling for each individual backer or something like that. But Kickstarter could also allow for failure without refunds. I think all of this is doable. People who don’t like risk can still back low-risk pre-order Kickstarters, people who enjoy backing something that could fail can do just that. (That being said, the linked project appears to have been fraudulent and no good faith effort appears to have been made, so it’s certainly appropriate to get the courts involved.)

forgottenpass 13y ago
I can’t help but think that this is the wrong approach by Kickstarter. I think it should only be possible to ask for refunds if the creator doesn’t make a good faith effort. The creator can just not offer rewards. Or small no-risk rewards that are worthless but let the backer enjoy the fact they backed. If that isn't enough to encourage someone to back, that's tacit admission that they're backing to "buy" the reward.
- arrrg 13y ago
  Hm, yeah, right, didn’t really look at it from that angle. However, I’m not sure how well that would work. I mean, I would personally have no problem with conditional rewards. (I backed Broken Age and I would have no problem with the reward being “Access to our documentary episodes of the making of the game and the game if we manage to finish it”.) I’m backing to get the reward, of course, but I accept that the project might fail and that I might not get a reward. I have no problem with that. But if the creators actually manage to make something in the end I would still like to get that thing automatically.