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I'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 s

I'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 ago
It seems like there was actual fraud in this case, where he wasn't spending the money from the Kickstarter on the project.
- sageabilly 11y ago
  Right, 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 ago
    I'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 ago
    I bet they had actual real evidence to act on (i.e. whistleblower), not just allegations from upset donors.
  - merpnderp 11y ago
    Seems 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 ago
      I am curious: if it's not irony, which project was it ?
      - smackfu 11y ago
        http://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 ago
      You should write to the FTC. Unless the KS was for a performance art project about gullibility on the Internet.
  - CydeWeys 11y ago
    Why 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 ago
      Yes I think it's a function of time and process. This could just be the start vs the "why now"?
emodendroket 11y ago
Well, 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 ago
  Many also get drastically overfunded, and the creators totally go off the rails with grandiose plans, instead of following their original, achievable goals.
  - adevine 11y ago
    The 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 ago
      Is 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 ago
        I 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 ago
These 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 ago
  Wow, 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 ago
    krowdster.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 ago
  Sadly 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 ago
    Could 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.
deleted 11y ago
[deleted]
DamnYuppie 11y ago
I wouldn't be surprised if someone at the FTC was an investor of this particular Kickstarter.

smackfu 11y ago

It seems like there was actual fraud in this case, where he wasn't spending the money from the Kickstarter on the project.

sageabilly 11y ago
Right, 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 ago
  I'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 ago
  I bet they had actual real evidence to act on (i.e. whistleblower), not just allegations from upset donors.
- merpnderp 11y ago
  Seems 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 ago
    I am curious: if it's not irony, which project was it ?
    - smackfu 11y ago
      http://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 ago
    You should write to the FTC. Unless the KS was for a performance art project about gullibility on the Internet.
- CydeWeys 11y ago
  Why 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 ago
    Yes I think it's a function of time and process. This could just be the start vs the "why now"?

emodendroket 11y ago

Well, 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 ago
Many also get drastically overfunded, and the creators totally go off the rails with grandiose plans, instead of following their original, achievable goals.
- adevine 11y ago
  The 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 ago
    Is 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 ago
      I 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 ago

These 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 ago
Wow, 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 ago
  krowdster.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 ago
Sadly 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 ago
  Could 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.

deleted 11y ago

[deleted]

DamnYuppie 11y ago

I wouldn't be surprised if someone at the FTC was an investor of this particular Kickstarter.