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FTC goes after board game campaign gone wrong in first crowdfunding case
- sageabilly 11y agoI'm curious why the FTC went after this particular Kickstarter. Was it seen as an "easy win" so the FTC could test the waters of going after other Kickstarter scammers? Will this expand outwards to include other crowdfunding sites as well? I'm always amazed by how quickly some of the popular Kickstarters are overfunded- like the one recently that was basically a complete rip off of Google's Project Ara. Why would someone invest in that? Why would anyone even begin to think that a small no-name company could possibly pull off something like that? Why would someone give them money?
- smackfu 11y agoIt seems like there was actual fraud in this case, where he wasn't spending the money from the Kickstarter on the project.
- sageabilly 11y agoRight, but there's been allegations/evidence of that on dozens of successful crowdfunded projects almost since the beginning of crowdfunding. So I'm curious as to why now? Why this particular project?
- zyxley 11y agoI'm guessing that they were easily able to prove that the money went into unrelated projects, rather than "just" being spent wastefully on things related to it. Given that Keith Baker and Lee Moyer (the main game designer and illustrator, respectively) hired a lawyer to try and force Forking Path to give refunds on the project, some of the groundwork was also probably done by the time the FTC stepped in.
- unreal37 11y agoI bet they had actual real evidence to act on (i.e. whistleblower), not just allegations from upset donors.
- merpnderp 11y agoSeems like many years ago one of the first kickstarters I invested in, was hugely successful, and the first message from after the group received their money was "After a grueling kickstarter campaign we're taking the team to Thailand to celebrate. This is currently being sent from the beach, and thank you all for making our campaign a huge success." This was the last message from them.
- johnchristopher 11y agoI am curious: if it's not irony, which project was it ?
- smackfu 11y agohttp://www.forbes.com/sites/markgibbs/2012/08/20/the-truth-about-kickstarter-and-zioneyez/ http://www.forbes.com/sites/markgibbs/2012/08/20/the-truth-a...
- reagency 11y agoYou should write to the FTC. Unless the KS was for a performance art project about gullibility on the Internet.
- CydeWeys 11y agoWhy not this particular project? Sometimes the answer is that the first thing is the first thing just because it happens to be first. There doesn't have to be a deeper reason or meaning before it. The government moves slowly, and they didn't have a policy for tackling crowdfunding projects before, or it wasn't on their radar. Well now it is.
- jusben1369 11y agoYes I think it's a function of time and process. This could just be the start vs the "why now"?
- emodendroket 11y agoWell, apparently this guy actively misrepresented what he was doing and just ran off with the money. Most Kickstarters gone wrong involve amateurs totally underestimating the resources they'll need to achieve something and running out of money before having a product.
- pavel_lishin 11y agoMany also get drastically overfunded, and the creators totally go off the rails with grandiose plans, instead of following their original, achievable goals.
- adevine 11y agoThe ZPM Espresso project was a great example of both of these. Founders were woefully inexperienced and underestimated the difficulties of manufacturing at every turn. Plus, the fact that they wildly overshot their initial goal meant they were in the worst "middle ground" of manufacturing. They had to worry about much more than just delivering a small number of prototype units, but they also didn't have so much volume that they were getting much discount from manufacturers.
- svarrall 11y agoIs there the ability to limit funding in bands to limit this 'middle ground' ie. if we're funded between a to b we'll deliver a prototype unit, but over b we won't deliver any more until we hit c. Hitting the initial funding goal opens up a stretch goal that is independent (backers are backing the stretch goal, not the initial campaign and won't get rewarded unless it's also hit)
- pavel_lishin 11y agoI mean, they could just say it. "Give us 40k, and we'll ship you some well-designed prototype coffee machines. Our stretch goal is 100k." I've stopped funding Kickstarters once they're significantly over their goal; I don't think it helps, and I can just buy their product later anyway.
- aaggarwal 11y agoThese projects on Kickstarter or Indiegogo platforms quickly gets overfunded because of the huge amounts coming to the projects from shady sources. If you would look at the backers of some of these projects, you will see a lot of big anonymous backings. I have even come across some agencies who will take money from the owners of these projects and put them back with multiple fake accounts to make it seem legit. This is why, even some of the hardware projects asks for a little money like 10,000$, when it is clear that hardware production involves high costs. After quickly getting overfunded, these companies takes advantage of PR and tech articles on popular blogs such as techcrunch, wired, and finally end up attracting a few good-natured tech enthusiasts who get deceived. Some of the projects on these platforms are extremely vague with no prototypes, but still are made to be successfully funded. It is great that finally they will be accountable.
- reagency 11y agoWow, nice growth hack. I wonder when someone will start curatig stats to build risk profiles for kickstarter investments. I wish KS would go back to the days of "we have built something, but we need to do a production run of 10,000 to make the per unit cost low". Everything else is a scam
- eonw 11y agokrowdster.co curates stats about crowd funding. I think it is mainly aimed at people running campaigns, but i think you can get it to make predictions on any campaign if you give it the right inputs about the campaign.
- Shivetya 11y agoSadly every time I have ended up at a project that uses Indiegogo it seemed to be projects whom kickstarter wouldn't touch. Are their rules that much different? The most well known one I found there was that solar roadways group.
- _delirium 11y agoCould be just what my Twitter most often links me, but I mostly run across really small-scale stuff on Indiegogo, legit but not suitable for Kickstarter because it's not a creative project. For example: someone raising $500 to pay for a trip to present at a conference. This sort of thing seems pretty harmless; either you kick the person $5 or you don't, and you don't expect anything in return either way.
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- DamnYuppie 11y agoI wouldn't be surprised if someone at the FTC was an investor of this particular Kickstarter.
- ubersubtle 11y agoIt was only a matter of time until they started. There are so many bad Kickstarters out there now, I won't back anything on there anymore.
- Yuioup 11y agoBait-and-Switchstarter.
- draugadrotten 11y agoI hope they go after the "Smartmaker" scammers as well, Dimitri Albino and Harold F. Timmis. http://kicksucker2013.blogspot.com/2014/09/be-maker-smartmakers-harold-f-timmis.html http://kicksucker2013.blogspot.com/2014/09/be-maker-smartmak...
- aaggarwal 11y agoThere is a big list of such projects where people were deceived. They should be hold accountable. This is a positive step towards it.
- notNow 11y agoI had no idea about this guy and his scam but I'm really amazed at how gullible people can be. The whole campaign screams SCAM. If this awful troll-like casing smARtDUINO wasn't enough to give him away, I don't what would actually. Shame that these people can get away with this outrageous stuff like this. Someone should sue him into oblivion and make him pay for all what he had done to unwary people. "A fool and his money are soon parted"
- KickSucker2013 11y agoI traced Dimitri back 20 years, he's run similar scams from Italy, China, Egypt, US - You'd think he was coated in teflon.
- KickSucker2013 11y agoMe too.
- MrDosu 11y agoDo we really want to raise our kids in a world where you can't take the money and run?
- deleted 11y ago[deleted]
- s73v3r 11y agoYES
- dmfdmf 11y agoI hope the FTC doesn't try to enforce consumer laws on an investment site. In the article they even refer to the contributors to the game as "consumers" which I think is a mistake. Anyone contributing to a Kickstarter project is investing and as such has to expect the possibility of a complete loss of funds. Of course, a site like this will attract scammers and the FTC should investigate fishy cases when the principals just take the money and run but that scam is older than capitalism.
- AndrewDMcG 11y agoThe regulations protecting investors are far stronger than those protecting consumers. Crowdfunding could not exist if the customers were legally considered investors.
- deleted 11y ago[deleted]
- cwyers 11y agoYes. There's reasons Kickstarter goes to great pains to make it clear backers are not investors. SEC regulations and compliance requirements are much more burdensome.
- cwyers 11y agoIt's not an investment site. Kickstarter is very clear that you're not investing. You don't share in profits. You're nothing like an investor. "Kickstarter is not a store" does not make Kickstarter into an investment platform either.
- smackfu 11y agoAn investment whose performance is capped at the value of your investment. A bit ridiculous.
- dmfdmf 11y agoThanks for the clarification but I'd guess in due time the FTC will rule this is investment. Its inherent even in the name "crowdfunding".
- Grue3 11y agoKickstarter and especially Indiegogo are so full of scams, it's ridiculous. And people keep funding them. Makes it all the harder for legitimate projects.
- nadams 11y agoI don't think scams as so much as inexperienced people who say "I've been doing this for X years and I can totally do it" then after spending 90% of the money and 6-12 months late - they go "actually....I don't think I can do this". This is also due to the fact that most projects try to do things at cost rather than allocating some buffer. There was one posted for a bluetooth controller - looked pretty nice and I believe they even had a prototype. When the due date came - excuses start flowing in such as some company in China wanted to charge more than the initial quote for the cases. The owner even claimed it would be too expensive to 3D print them (which I think is a lie - the printer itself is expensive but the amount of filament needed per case wouldn't have been that much). Granted, using a 3D printer probably would have taken another year.
- nitrogen 11y agoIndeed. It's especially frustrating to see a Kickstarter for something that would literally violate the laws of physics, and at the same time have your own project get misunderstood and rejected on seemingly trivial grounds.
- deckar01 11y ago> Chevalier has agreed to a settlement order with agency. Under the agreement, he's prohibited from making misrepresentations about crowdfunding campaigns and failing to honor refund policies in the future. The order also contains a $111,793.71 judgment against Chevaliar, but it is suspended because of his inability to pay. "The full amount will become due immediately if he is found to have misrepresented his financial condition," an FTC press release said. The Post was not able to immediately reach Chevalier, who did not admit guilt as part of the agreement. So, he only has to promise not to do it again as long as he actually spent all of the money? Surely there is something else they can do to recover these funds.
- reagency 11y ago1. The promise not to repeat: that looks silly on the surface, but is standard legalese so the govt can hand out a stronger penalty if he reoffends. 2. If the money is gone, it is gone. The (bad) loophole seems to be that there is no recovery lien against his future earnings.
- emodendroket 11y agoCan't squeeze blood out of a stone...
- brohee 11y agoHe's not a stone, how much do kidneys go for against? ;)
- s73v3r 11y agoSounds like he needs to get a job, then.
- emodendroket 11y agoYou can't seize assets someone doesn't have and it's hard to make them acquire assets just to have them seized against their will. I don't know what you're expecting them to do, short of going for criminal charges and locking the guy up.
- fencepost 11y agoWhen I saw the headline I wondered whether it was about the Goblins comic game where the game developer basically took the money and disappeared. The web comic artist is trying to make sure that backers get at least the game (edit: maybe?), but he's been hampered by Kickstarter's refusal to let him have the list of backers since he wasn't part of the Kickstarter itself. I know it pissed him off no end when Kickstarter decided to send his name out to the backers saying "[he's going to get you your stuff]" while still refusing to tell him who the backers were. Not a fine moment there. The comic: http://www.goblinscomic.org/ http://www.goblinscomic.org/ I believe this is the latest update: http://www.goblinscomic.org/kickstarter-making-the-mafia-look-like-chucky-cheese-since-2009/ http://www.goblinscomic.org/kickstarter-making-the-mafia-loo... in which Kickstarter sent out that promise while linking all those unknown-to-Tarol backers to a page with Tarol's home address. Updates: added detail link, plus a bit more detail on it.
- PixelB 11y agohttp://www.goblinscomic.org/kickstarter-making-the-mafia-look-like-chucky-cheese-since-2009/ http://www.goblinscomic.org/kickstarter-making-the-mafia-loo... Wow, that Goblinscomic guy fails at web design 101. There's a huge black graphical bar in the background with black text that males the left inch of that paragraph unreadable.
- fencepost 11y agoPossibly your adblocker is overambitious? I'm mobile right now but it's working in current Firefox, Dolphin and Chrome on Android. Black area is the background for a left side vertical ad, but even with Bluhell Firewall blocking in Firefox the layout is fine.
- yellowapple 11y agoI'm on Conkeror (basically Firefox) with Adblock. It looks like (to me) that the text doesn't line up with the background image, causing some of the text to instead cover that black bar. Seems odd; you'd think the text and the background would be part of the same div or whatever.
- amateurpolymath 11y agoThese crowdfunding platforms heavily rely on trust between backers and creators. I wonder how many failed projects, scams, etc. it will take before that trust is eroded? If fraud isn't policed better, Kickstarter will permanently lose many of its best backers. Example: I once invested in a small Indiegogo art project. The creator was supposed to produce and ship a small book of comic strips to the backers. This was a very doable project but the creator never delivered and has to this day never refunded the backers. I haven't funded anything since and probably never will.
- eonw 11y agoive always seen this as a problem with crowdfunding, give someone with no business or money management experience and its likely it wont be well managed or ran... which increases the risk of no return on my investment.
- thedufer 11y agoI think you're misunderstanding - they went after someone who didn't even attempt the described project, and showed no intent of ever doing so. There's a big difference between an outright scam and someone trying but not really knowing what they're doing.
- KickSucker2013 11y agoThere is a sea of difference between a project that didn't deliver due to lack of experience (or mental breakdown https://www.kickstarter.com/projects/73258510/sad-pictures-for-children/posts/759318 https://www.kickstarter.com/projects/73258510/sad-pictures-f...) and straight up predatory marketers insinuating themselves into a trust based eco-system. Fact is the majority of the internet is lazy and can't be bothered to do a simple Google search before they hand over their cash (i.e. smARtMAKER)
- binoyxj 11y agoThis is another Kickstarter scam by Andy Muldowney. Still not shipped even after more than 3 years https://www.kickstarter.com/projects/1953425088/mprinter-an-analog-printer-for-a-digital-world https://www.kickstarter.com/projects/1953425088/mprinter-an-...