While crowd funding has done a fair amount of good for projects looking to get off the ground in recent years, we have also seen backers burned on several occasions by trusting scammers. In the past, we've seen several Kickstarter creators go back on promises and rip backers off all while getting away with it but now, it looks like the FTC is finally going to crack down on this.
Today, the FTC revealed that it is willing to take action against fraudulent Kickstarters, starting off with project ‘The Doom That Came to Atlantic City', a board game that raised for $120,000 but did not deliver a single reward to backers who parted with their cash.
Jessica Rich, the Director of the FTC's Beurau of Consumer Protection said in a post: “Many consumers enjoy the opportunity to take part in the development of a product or service through crowdfunding, and they generally know there’s some uncertainty involved in helping start something new. But consumers should be able to trust their money will actually be spent on the project they funded.”
After the FTC investigated the failed board game project, it found that creator, Erik Chevalier canned the project after 14 months. Apparently during that time most of the money raised was spent on personal expenses like moving across the country, paying rent and even licenses for another project entirely.
The FTC did order that refunds be given to all backers but has put this on hold while they check that the project starter actually has any money left at all. There have been several Kickstarter scams in recent years so the FTC still has plenty more to crack down on.
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KitGuru Says: While this is all well and good, it doesn't solve the root of the problem, which are Kickstarter's own terms and conditions, which should be made stricter to bring more accountability to project starters. It's all a similar problem to Early Access titles on Steam, although you can actually get refunds for those now. Kickstarter would do well to take a similar approach.