It’s not okay to raise thousands of dollars through Kickstarter and keep the money without producing anything, the Federal Trade Commission said Thursday as it took its first consumer protection action on a crowdsourcing campaign.
The FTC case involved Erik Chevalier, an Oregon man who launched a business called The Forking Path. He launched a Kickstarter campaign in 2012 to produce a board game called “The Doom That Came to Atlantic City!” which had been designed by two prominent game artists. Chevalier promised that if he raised $35,000, backers would get rewards such as a copy of the game or pewter figures.
He ended up raising $122,000 from 1,246 backers, most of whom paid $75 or more so they could get rewards. Despite offering updates on production of the game, Chevalier announced about 14 months later that he was cancelling the project. Despite promising to refund the money, he didn’t do so. FTC investigators found that he spent most of the money on personal expenses, including a move to Oregon.
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The FTC announced the suit on Thursday, citing concerns about innovation and competition as a primary reason.
The Federal Trade Commission is getting involved and wants companies like Facebook, Twitter, YouTube, Amazon, Reddit, ByteDance (owns TikTok), and even Discord to submit information about their privacy policies, advertising rules, and more.
I'm okay if Kickstarters fail, but if you use most of the money funded on personal expenses (realistic living expenses are fine; that's often a big part of projects, especially small ones) from an overfunded project that promised copyright protected characters as game pieces, you need to be reprimanded.