
Washington state sues Kickstarted game creator who failed to deliver - kryptiskt
http://www.gamasutra.com/view/news/216887/Washington_sues_Kickstarted_game_creator_who_failed_to_deliver.php
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waterlesscloud
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=...](https://www.kickstarter.com/help/faq/kickstarter+basics?ref=help_nav)

~~~
iandanforth
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
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
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.

~~~
DerpDerpDerp
How is Kickstarter any different than me paying an artist to write a song for
me on my behalf or a carpenter to build me a house?

I'd certainly have ground to sue the artist or carpenter if they failed to
eventually deliver a song or house (or indeed, didn't deliver one according to
the terms of our agreement).

~~~
jgg
Because you're funding a project that may or may not work out. The whole point
of crowdfunding is supposed to be, "You give us money to develop an idea, and
you might get a reward in return", not, "I'm paying you $35 for an order that
includes a bumper sticker and a t-shirt with your logo on it." It's less like
your carpenter example, and more like a VC firm dumping money into a startup.

It's supposed to be speculative investment. Whether or not Kickstarter and
others have decided to backpedal and pretend they have some kind of legal
precedent for holding project owners to their word, in order to make their own
business seem more legitimate than it is, is another story.

~~~
DerpDerpDerp
There's no requirement that the Kickstarter complete the core project - just
that they provide any promised reward.

Many projects, where the project is highly speculative, provide explicit
rewards and then an offer to get the benefits of the main project that's
conditional.

Also, in what way is it not like an experimental house design using, eg, 3d
printed concrete (in some new manner)?

There's a well established body of contract law about how to handle that kind
of contract to build a house with a new technology, and the liabilities
involved.

~~~
jgg
_There 's no requirement that the Kickstarter complete the core project - just
that they provide any promised reward._

That makes no sense. Much of the time, the reward is directly related to the
core project.

 _Also, in what way is it not like an experimental house design using, eg, 3d
printed concrete (in some new manner)?_

I'll repeat myself - I have no idea what model Kickstarter is now framing
themselves under or how it applies to the legal system, but in the original
model for _crowdfunding in general_ , you were giving a voluntary donation to
an idea _with the explicit knowledge that you might never receive it or any
associated awards if the project failed_. You weren't paying for a t-shirt -
you were giving money to someone's business/creative idea and receiving a
"free" t-shirt in return.

What Kickstarter's Terms of Use, then and now, actually imply and signify in a
legal sense, and whether or not the defendant can easily make the claim that
risk was fundamental to nature of Kickstarter project backing and thus the
backers voluntarily chose to engage in a speculative transaction which had no
legal obligation to be fulfilled, are questions for an attorney to answer.

Do I think the guy cut and ran? Yeah. Do I think that's wrong? Yeah. But I
also think if it was made completely clear to each and every person donating
that what they were doing was contributing to a project, not making a purchase
(Kickstarter even states themselves that they are not a store here:
[https://www.kickstarter.com/blog/kickstarter-is-not-a-
store](https://www.kickstarter.com/blog/kickstarter-is-not-a-store)), then
enacting Consumer Protection borders on protecting people from their own
stupidity.

~~~
supermatt
> That makes no sense. Much of the time, the reward is directly related to the
> core project.

That is the decision of the project creators. They don't have to offer the
product as a reward. They could offer stickers/tshirts/whatever.

Kickstarter is not a store. Its the creators who are choosing to treat it like
one, and they should be wholly responsible for their decision to do so.

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devindotcom
I just talked with the assistant AG in charge of this case. He seems pretty
with it, and they're not trying to do anything crazy here - they see it as a
pretty straightforward breach of contract sort of thing. They chose this case
because it seemed "very clean" and likely to have a solid outcome that would
be a good deterrent for bad actors and encourage backers who get shafted.

~~~
rasz_pl
Its not that clear cut case. Project wasnt a pure fantasy, failure to deliver
could be caused by business errors.

There are multiple better cases where its clear they were started as scams.
For example:

[https://www.indiegogo.com/projects/healbe-gobe-the-only-
way-...](https://www.indiegogo.com/projects/healbe-gobe-the-only-way-to-
automatically-measure-calorie-intake)

[https://www.indiegogo.com/projects/mu-thermal-camera-a-
great...](https://www.indiegogo.com/projects/mu-thermal-camera-a-great-tool-
to-save-on-energy-costs)

~~~
devindotcom
Healbe kickstarter only closed like three weeks ago, and mu has offered
refunds and work is ongoing. This card thing closed in October of 2012 and
stopped updating in July of 2013, and offered no refunds. That makes it a much
clearer case than these. Even if it is "business errors" he's apparently
liable for them.

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Mithaldu
The important bit here is not the non-delivery, but the fact that the creator
failed to keep up communication about the project.

The suit states that Kickstarter rules state that the creator is legally bound
to fulfill, but may delay as much as need, but also must communicate
regularly.

The project in question stopped communicating in July 2013, so the accusation
is demonstrated intent to not deliver, thus breaking the legally binding
contract.

~~~
dragonwriter
> The suit states that Kickstarter rules state that the creator is legally
> bound to fulfill, but may delay as much as need, but also must communicate
> regularly.

The suit _does not_ state anything about creators being allowed to "delay as
much as need".

> so the accusation is demonstrated intent to not deliver

No, the accusations are, in the first cause of action, representing that
rewards would be delivered in approximately December of 2012 and not
delivering them and, in the second cause of action, failure to provide refunds
to those who requested them, and failure to offer refunds to those who had not
requested them, given the failure to deliver.

[http://www.scribd.com/doc/221464947/State-of-Washington-
vs-A...](http://www.scribd.com/doc/221464947/State-of-Washington-vs-
Asylum-5-1-2014)

~~~
Mithaldu
Note specifically the middle part of 4.9. It does not say word-for-word the
same thing i said, but it very strongly implies that delays are fine (and in
fact they normally are accepted on kickstarter) as long as communication is
kept up.

Also note the kickstarter FAQ itself:

[https://www.kickstarter.com/help/faq/kickstarter+basics#faq_...](https://www.kickstarter.com/help/faq/kickstarter+basics#faq_41859)

    
    
        It's not uncommon for things to take longer than 
        expected. Sometimes the execution of the project proves
        more difficult than the creator had anticipated. If a
        creator is making a good faith effort to complete their
        project and is transparent about it, backers should do
        their best to be patient and understanding while
        demanding continued accountability from the creator.

~~~
dragonwriter
> Note specifically the middle part of 4.9. It does not say word-for-word the
> same thing i said, but it very strongly implies that delays are fine (and in
> fact they normally are accepted on kickstarter) as long as communication is
> kept up.

The suit says that the Kickstarter FAQ strongly suggests keeping up
communication in the event that delays are unavoidable, that does not say that
the creators are _allowed_ to delay as much as they need. Particularly, there
is nothing inconsistent about it being a recommended course of action in the
event that a binding obligation is not able to be met -- the fact that
something is _required_ doesn't always mean it is _possible_.

~~~
saraid216
I feel obligated to point out that you guys are discussing the exact issue
that the case will hopefully set some precedent for: that is, what constitutes
an acceptable delay.

My guess is that it will shake out that any delay is actionable for a suit,
but communications are a mitigating factor. It depends a lot on what kind of
defense Altius goes for.

~~~
enjo
I would be SHOCKED to see this go to trial. Not over $25k. The money is long
ago spent (I'd bet) so the whole thing is a real waste of time.

~~~
zecho
I'm inclined to agree on the specifics of this case, but not in the abstract.
Kickstarter and other crowd funding entities represent an interesting dearth
of case law. Here, consumers aren't necessarily protected by either consumer
laws or by investment laws.

Considering large corporations have purchased Kickstarted projects and major
films have been produced with crowd funding, these are very important issues
to begin sorting out.

------
nostromo
All over $25k? Doesn't that seem much too low to be worth the AG's time? The
top reward tier was only $93.

It's hard to imagine a person can even mount a defense against a state AG for
less than $25k...

Yes, they f'ed up. But unless it was malicious, this seems like an excessive
response. I suspect an AG is trying to make a name for him or herself.

~~~
orik
It's easy to make an attack on a politician and dismiss things, but I think
it's much more likely that someone (Bob Ferguson) is trying to set a precedent
on crowdfunding and their obligations to the funders.

~~~
nostromo
Makes sense. But they should wait for a better case.

This seems like a founder that underestimated the amount of time and resources
required to start a company and produce a product. It sucks, but it happens.

Maybe a better case would be the guy that lit the backer rewards on fire
because he got tired of their pestering.
([https://www.kickstarter.com/projects/73258510/sad-
pictures-f...](https://www.kickstarter.com/projects/73258510/sad-pictures-for-
children/posts/759318))

~~~
BryantD
Nah. Ed Nash had the art, he had USPCC print the proofs; the only remaining
thing he needed to do was give USPCC money. He didn't. His backer tiers were
similar to other card deck backer tiers, so it's not like he didn't get enough
money from the Kickstarter. He either kept the money or (more likely) spent it
on some other aspect of his promotion business earlier, in the hopes that he'd
get the money to print the cards from somewhere else.

Kickstarted card decks are really simple and low risk as long as you have the
art. USPCC does a couple of dozen of these every year.

------
itsameta4
I feel like perhaps if the creator can't deliver, he should make public all
work produced by the deadline. That way, at least if an interested party among
the backers wanted to pick up where the creator left off, they'd be able to do
so.

This seems like something Kickstarter could fairly easily work into their TOS.

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anigbrowl
A positive aspect of this is that the AG is suing the creator rather than
Kickstarter itself, which sets a good precedent.

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rasz_pl
At leasy KS doesnt promise to vet projects like IGG did (before deciding its
more profitable to actively support scams)

[http://pando.com/2014/04/03/after-pando-shows-clear-
evidence...](http://pando.com/2014/04/03/after-pando-shows-clear-evidence-of-
fraud-on-indiegogo-company-responds-by-deleting-anti-fraud-guarantee/)

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etler
Is there a precedent for this in traditional investing, such as a case where
an angel invests in a company and the founders take the money and run, or blow
it without making a real attempt at the company?

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larvaetron
Are backers consumers or investors?

~~~
nolok
They're consumers, what websites like kickstarter call crowd funding is not
very different to good old pre-ordering legally speaking. And if you pre-order
a product you have a right to delivery or getting your money back.

------
larvaetron
I guess Kickstarter is a store now.

