"Is a creator legally obligated to fulfill the promises of their project?
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.)
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.
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.
Nothing new here.
> 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".
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.)
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?
It's fraud, but it's not commerce, so this is the wrong law to use.
> 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?
Because people on message boards know they're not buying from a store and can't expect the same level of state consumer protection, and it's not in the states interest to expend resources on protecting message board buyers. If you didn't deliver you'd be breaking the law and the people who bought things would be able to sue you, but I wouldn't expect the state AG to go after you.
Each of the backers only contributed small amounts to the project, so a tort action by each/any of them would have been economically unfeasible. Hence, the consumer protection law kicks in, allowing the state to pursue action in their stead because it is far more cost-effective. (For example, the AG's office personnel are salaried, so legal fees aren't dependent on hours spent, etc.)
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).
The ideal kick starter is more like a trading expedition in days of old. They are proposing to set sail for distant shores and bring back untold riches, but a lot could go wrong along the way. The ship could sink, the lands they reach may have no goods for trade, the locals might not be interested in the goods the explorers brought, trade goods they do acquire could spoil on the way back... this is not fraud, this is risk shared by the backers. If you don't want risk, invest in T-bills and buy goods in physical stores.
Now if the ship never sets sail, that is fraud.
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.
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.
That makes no sense. Much of the time, the reward is directly related to the core project.
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.
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), then enacting Consumer Protection borders on protecting people from their own stupidity.
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.
To illustrate the first point, companies have used Kickstarter for projects that were essentially fully developed first, and where the Kickstarter was only to provide capital for the production run (to alleviate the risk of scaling production wrong) -- with rewards being (or including) the thing being produced. As long as the rewards offered have a production cost (not retail value) less than the support level required to earn them, this eliminates the creators risk in production of a run that includes both the rewards and additional units to be sold through whatever "regular" means are appropriate to the product (ideally, it also provides buzz through the rewards to spur sales of those additional units). From that, the company can then assess future demand and appropriately scale later production runs.
To illustrate the second point, its quite possible to do a speculative product and offer rewards related to but not dependent on the project. For a game project, for instance, you could do things like exclusive prints of concept art, etc.
If you want people to share your risk, well, there are avenues that do that -- like sale of equity. Of course, those are more heavily regulated than simple sale of goods, because its very easy for avenues where you are asking the purchaser to assume risk to be used as vehicles for fraud.
And if Kickstarter commitments aren't enforced like sales commitments, it will be as much (or more) the doom of Kickstarter as anything that would strictly enforce them -- because as soon as any uncertainty is resolved in that direction, Kickstarter will become (and become known as) as an ideal vehicle for fraud, and backing projects on Kickstarter will become the equivalent of falling for a 419 scam.
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.
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.
There are multiple better cases where its clear they were started as scams. For example:
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.
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.
Also note the kickstarter FAQ itself:
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.
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.
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.
We're really not, we're discussing what the suit actually says. What is actually an acceptable delay is a separate question.
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.
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.
Those interested in reading a history should pick up Joseph "Yellow Kid" Weil's bio: http://www.amazon.com/dp/0767917375/
He was a pioneering American con man. Many of the scams he pulled weren't illegal at the time, so they had to come up with new laws to prevent him and imitators from fleecing more people.
Whether or not this AG knows and cares about limiting criminal innovation, you can be sure some of them do.
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...)
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.
1) note the quotes and yes, I think there is an element besides "guardian of the voters" here.
This seems like something Kickstarter could fairly easily work into their TOS.
If there are no repercussions to collecting a bunch of crowdfunding money and disappearing, doing that will become a lot more common (likely with amounts a lot higher than $25k) which will eventually just serve to kill the entire crowdfunding model since nobody wants to be a sucker twice.
Cops chasing people is for the most part stupid, record their plate, send them a ticket. High speed police chases represent serious dangers to the public for little benefit. Many modern police departments have policies in place to discourage police chases because of the danger posed to the officers, public, and the suspects themselves.
In the broader sense of justice it would have been very prudent for the unproductive war on drugs to have ended years ago as the costs to society outweigh the benefits to society.
Fiat justitia ruat caelum, like an eye for an eye, is actually a pretty stupid policy.
Since the UK is covered in CCTV the best idea is probably to 'chase' them via CCTV and deploy spike strips intelligently while they are driving at low speed.
So for the most part a high speed chase involves huge risk for little gain.
If you beat me up and I incur $10k in ER bills, chances are prosecuting you is going to cost more than that. The point is not to recoup the costs, but to make it risky for others to do the same thing.
I absolutely would support it if they were being charged with fraud, as in your example I would be charged with assault. But a civil suit for such a small dollar amount typically goes to small claims court.
Its really not -- civil penalties that are not about restitution -- like the $2,000 per violation penalty attached to the consumer protection law Washington is invoking here -- serve a very similar function to criminal fines.
> I absolutely would support it if they were being charged with fraud
They are being charged with violations of Washington's Consumer Protection Act including "unfair or deceptive acts or practices in trade and unfair methods of competition". Which isn't a whole lot different than "fraud".
I hope they use this case to set an example. No easy scamming on this platform, walk along.
First, where does the "/ 50" come from?
Second, while the suit calls for restitution to be made part of the courts orders, it also seeks civil penalties of $2,000 per violation of the applicable consumer protection law, and for costs including legal fees.