***More Fundraising Terror Tales!***
(Rated XYZ – Mentor Guidance Advised)
For the first time, the Federal Trade Commission (FTC) has fined someone for using “unfair or deceptive” acts related to the crowdfunding site Kickstarter.
In May 2012, Erik Chevalier launched a 30-day online fundraising campaign on Kickstarter, seeking to raise $35,000 to create a fantasy board game called “The Doom That Came to Atlantic City.”
When the fundraising campaign closed on June 6, 2012, Erik had raised $122,874 from 1,246 individuals, including over 1,000, or about 85% of backers, who had pledged more than $75 each, according to the FTC complaint. As it turns out, Atlantic City is indeed a gambling destination. Nucky Thompson would have been thrilled.
Backers thought they were helping launch a new board game, but ended up funding personal items, rent, and moving expenses for the “game maker.” Given the popularity of the crowdfunding industry (which raised a collective $16.2 billion dollars last year) it is surprising this is the first time the agency has taken legal action to protect online users.
While outright fraud is rare on platforms such as Kickstarter and Indiegogo, it is up to the users/backers to detect and report fraud and sort out conflicts. We recommend that if you want to back a campaign on a crowdfunding platform, you perform some due diligence so you aren’t trapped in the Doom of Atlantic City.