Not So Awesome Stuff: Your Worst Crowdfunding Project?

from the looking-at-the-other-side dept

Let me start this post off by noting that I’m a huge fan of crowdfunding and think that it’s an amazing force for all sorts of good things in art, culture and innovation. That’s part of the reason why we do a weekly awesome stuff post highlighting interesting (and sometimes awesome) crowdfunding projects. But, it should be noted that crowdfunding projects don’t always turn out great. There are plenty of horror stories to go around — some involving what appear to be outright fraud, certainly — mostly just because project creators are way overly optimistic on their ability to achieve their goals. I’ve backed a few dozen projects, and I can only think of a handful that were delivered on time. To be honest, this doesn’t bother me so much. What’s much worse is that as projects go bad, the project creators tend to disappear, not updating people with the bad news, leading people to get angrier and angrier.

Kickstarter, for one, has long tried to make it clear that it is “not a store,” but rather that you’re backing a project, and there’s risk associated with that — including the risk that a project may fail. However, it’s still disappointing to back a project and have it be totally disappointing. So, this week, I thought I’d ask people about the most disappointing crowdfunded projects they’ve seen or backed. And I’ll reveal mine. Back in the summer of 2013, on one of our awesome stuffs I wrote about the HOT Watch, a new smart watch that had some interesting features, including the ability to hold your hand up to your ear and use your hand like a phone. The video for the project was super cheesy/infomercially, which scared me off, but I’d become somewhat fascinated with the possibilities for smartwatches, and at the last minute bought into it. The backers of the project swore up and down, left, right and center, that the project would ship in time for Christmas in 2013. Right up until basically the end of the year the company insisted it would be shipping. It’s now February of 2015 and I still don’t have mine. Because I just don’t care any more, I’ve asked them for a refund and they haven’t replied, which is pretty much what I expected. Some people appear to have received theirs — but I haven’t and it’s now 15 months late, and the market for smartwatches has moved way past the HOT Watch.

Lesson learned: crowdfunder beware.

Another, similar project, which (thankfully) I did not back is the Lima, which was a little device that was supposed to enable you to very easily set up your own personal cloud with USB devices at home. That presentation was super slick, and I was tempted to back it, but the pricing seemed a little steep, and I’m glad I didn’t because while it also promised delivery by December 2013, at last check, it also has not delivered at all, and there are tons of people demanding refunds. I had mentioned the Lima in another awesome stuff post, and the company reached out to me saying the team wanted to send me a postcard (?!?!) as a thank you. I told the person not to bother, but the company still found our office address and sent it anyway. It seems like, rather than sending out post cards to people who don’t want them, they could have put time into working on the product.

Anyway, this isn’t to knock crowdfunding, or even these two projects in particular. It’s just to note that there are risks associated with crowdfunding, and certain projects turn out to be flops, so you need to be aware. In the meantime, would love to hear about crowdfunding flops that you have backed (or luckily avoided…).

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Comments on “Not So Awesome Stuff: Your Worst Crowdfunding Project?”

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Anonymous Coward says:

Re: Re: Kickstarter No-Show

Those that just want money to pocket it should be punished for fraud. There should be serious consequences. When someone puts forth a kickstarter project to meet a certain goal and that goal gets met and, instead of delivering their product, they put out another kickstarter project to meet an even higher goal, etc… and then they disappear last minute once gullible people have finally gotten the sense to become suspicious there should be consequences. It’s essentially fraud.

Anonymous Coward says:

Re: Re: Re: Kickstarter No-Show

Those that just want money to pocket it should be punished for fraud.

That requires that the people who put up the project are brought to trial, which is outside of Kickstarter as a company’s jurisdiction and responsibilities. It is the responsibility of the law enforcement of the country of residence of those committing the fraud.

Votre (profile) says:

Re: Re: Kickstarter No-Show

That’s bullshit. Kickstarter gets their fee for listing a campaign regardless of whether the project delivers as promised or not. Since they act as the medium through which the funds are collected there is some responsibility beyond their making excuses, suggesting we all be understanding and patient, and turning a blind eye as much as they do.

Sooner or later they’re going to get caught up in the loop and get hit with some serious legal action no matter how many disclaimers they issue. And that will be unfortunate. Because it risks poisoning the well for crowdfunding in general. And that’s too valuable a source of funding to lose because of their “three monkeys” attitude.

Kickstarter doesn’t get to have the final word on what the limits of their liability may or may not be. When you act as the middleman that collects and distributes funds, it’s questionable whether or not some extrapolation of the “safe harbor” rule applies. Whenever money changes hands, it tends to change everything.

Anonymous Coward says:

Re: Re: Re: Kickstarter No-Show

Both Kickstarter and Youtube provide an open stage that anyone can use. Youtube has gone to great lengths and spent millions of dollars in an ongoing and highly aggressive effort to keep everything legal, while Kickstarter basically just shrugs its shoulders and does nothing. Why the huge difference? Well, basically because a well-funded, highly litigious industry has been cracking a whip on Youtube, while Kickstarter’s main critics are ordinary people who’ve been ripped off. And we all know how much “the system” cares about the small guy.

There’s no reason why Kickstarter can’t at least give donors some simple, common-sense protections, such as making fundraisers contractually obligated to immediately and unconditionally refund all donations if the project ever gets bought out by a major corporation. There’s simply no excuse for a project’s founder to be allowed to double-dip that way … and then laugh all the way to the bank.

PaulT (profile) says:

Re: Kickstarter No-Show

“even though THEY (Kickstarter) profited!”

Yes, how dare they profit from the service they provide! Next you’ll be telling me that GoDaddy make money from domain names they sell to businesses that fail, that printers make money from their physical advertising or that people even make money from the PO boxes they provide to them! The audacity!

I hope you’re not actually this dumb.

Max (profile) says:

Worst experience?

It has to be Elite:Dangerous, hands down. After explicitly promising a fully offline playable version and announcing they don’t feel like making it anymore, right before their official launch, the length those people went to trying to weasel themselves out of the furious refund requests of those not happy with the news is mind-boggling. It can all be read in the Kickstarter comments of the campaign. I had countless other projects go somewhat sideways, but none stooped anywhere close to the viciously malicious level E:D did. Once I even backed a book that kept dragging on to ultimately see the project owner disappear completely for a over a year – but even so, she ultimately resumed contact, apologized, and FULLY REFUNDED my pledge, without me even asking – and she was not some venture-backed mega-LLC. I respect that much more than I ever will E:D again…

Anonymous Coward says:

I don’t mind the people who honestly try but fail. What bothers me is that there are obviously many professional thieves behind crowdfunding projects whose sole intent is to separate fools from their money. Unless the law gets involved (something most of us would rather not see) the thievery is likely to only get worse, as more and more scam artists see this as a goldmine of easy money with no fear of ever getting caught.

This is why I will never donate to a crowdfunding project — unless it’s run by people I already know and trust.

Votre (profile) says:

Re: Re: Re: Re:

Fraud in the purely legal sense has nothing to do with your intentions. Many people are surprised to discover just how specific and precise the laws that deal with fraud are.

If you make a promise, accept money, and fail to deliver that’s a breach of contract. And that alone can be grounds for being charged with fraud. Even failing to deliver within the timeframe promised can sometimes do it. Which is why online businesses seldom hit your charge card until they actually ship your order. There are rules for how long you can hold money and not deliver.

And all your good intentions and/or lack of experience won’t count for much by way of a defence if you end up in court.

OldMugwump (profile) says:

Re: Re: Re:2 Re:

Yes, if you make the promise.

But my understanding of Kickstarter (at least) is that they aren’t making the promise. They only promise is that they’ll make a good-faith effort to complete the project and deliver the rewards.

You’re funding a project, that may or may not be successful. Not buying a product. A year or so back Kickstarter changed a bunch of things to try to make this more clear to people.

I’m OK with this model. But I do expect a real good-faith effort to deliver.

If somebody just does a song-and-dance and then pockets the money, I agree that’s fraud.

Mike Masnick (profile) says:

Re: Re:

This is why I will never donate to a crowdfunding project — unless it’s run by people I already know and trust.

That seems extreme. I would say that the vast majority of projects I’ve backed have turned out to be great, and I was quite happy with the result. I can only think of a very small number that ultimately disappointed.

Anonymous Coward says:

Re: Re: Re:

“I would say that the vast majority of projects I’ve backed have turned out to be great”

To learn that a discriminating person with an exceptionally sharp mind has rarely been ripped off is completely meaningless to the rest of us, many of whom are considerably less knowledgeable and more gullible.

Consumer-protection laws don’t exist to protect the savvy customers — they don’t need any protection — these laws exist to protect the lazy, the gullible, and the elderly possessing poor judgement skills.

One only has to consider the millions of dollars that Peter Popoff rakes in selling “miracle water” to see that there are plenty of people out there who will easily fall for scams, even when perpetrated by people with a proven track record of fradulent conduct. Amazingly, even the Nigerian 419 scam is still roping in plenty of people.

By its very nature, crowdfunding is wide open to abuse. Unless the industry becomes more tightly regulated, it’s probably only a matter of time before the majority of its projects will be of dubious nature, and “buyer beware” will be the rule rather than the exception.

PaulT (profile) says:

Re: Re: Re: Re:

“many of whom are considerably less knowledgeable and more gullible”

Maybe they should wait for a product to be completed and available via normal retail channels instead of funding uncompleted projects? It’s hardly Kickstarter’s fault if a reasonably realistic project fails, and someone didn’t bother to educate themselves on the risk of funding it.

Anerdymous Coward says:

Being into tabletop role-playing game hobby online means knowing the hit-and-miss nature of crowdfunding. For every incredible product that gets to see the light of day, there are a surprising number of projects rife with bad luck, or bad actors.

And there’s a blog that has an ongoing series of RPG Kickstarters that deserve the scrutiny they’re getting:

Ehud Gavron (profile) says:

It's not fraud when you GAMBLE and lose.

If a guy on a street corner has a sign that says “Will work for food” and you give him a dollar and they he does no work, is that fraud? Is it material misrepresentation? Is it a crime of any sort (other than panhandling which is not a criminal offense in my US/Arizona jurisdiction?)

I see the comments above me calling for these “blatant criminals” to “have something done.” Tone it down, wiseacres, because the “something to be done” is not giving money to these people.

“But how do we know?” Don’t default to giving money to strangers, and then it’s easy. “But this will kill crowdfunding!” No. It will remove from crowdfunding people who think they are shopping at a store. It’s not.

When you’re supporting crowdfunding you are NOT INVESTING in a RISK that if it pans out then MAYBE what you get is what was promised and MAYBE it will be cheaper than the fully-developed product and MAYBE it will be as good as that one and MAYBE you’ll get it first.

You are GAMBLING that you will get your money’s worth. That’s a far different proposition than investing. Investments have value and assets. Crowdfunding is a gamble.

If you get that you are GAMBLING and your “winnings” are “early, cheaper, and not as fully baked — if at all” and your “losses” are “yeah none of this may come to fruition” then THAT is what backing a kickstarter is all about.

In the real investment world we have ROI analysis and we have risk/reward analysis. If you apply those to kickstarters you will see they are REALLY REALLY BAD “investments”. That’s because they are wagers.

They are, however, a great way to help someone get their project going. If you think of it in that way and consider your money “lost” when you invest it, then anything you get back is a win.

Full discloser… things I’ve supported:
OBDLink MX WiFi – delivered and it’s $10 cheaper than market. (Yes, I saved $10 and got it 60 days sooner at a risk of 100% of the money I paid).
Rubber Band Machine Gun – They’re out of Ukraine, and there is a war going on, and they haven’t been shy at saying that. I don’t expect to see that in my lifetime.
PockEthernet – delivered and not yet available to the public. Doesn’t have all the originally-envisioned features but it’s still a good deal. I got two.
Quarter Century Belt – delivered, $10 cheaper than its current market price. Same comments as above. Great belt!
Rising desk – due for delivery mid 2015. When I see it I’ll know it’s real.

So I’m pro crowdfunding but consider it a GAMBLE or a WAGER. If I “win” I get to save $10 or get something two months sooner. That’s it.

Stop hassling the panhandlers. The only fraud is anyone who takes a kickstarter claims seriously and thinks if they aren’t 100% met there’s a criminal event there.


Tony (profile) says:

Re: It's not fraud when you GAMBLE and lose.

“I see the comments above me calling for these “blatant criminals” to “have something done.””

To see the comments I see here is a bit disturbing. Where do they think these calls for “doing something” is going to end?

Crowdfunding came about, ultimately, because the regulations for raising investment funds are SO complex and sticky that you need a significant amount of money to even START raising money (Needing $250,000 to raise $25,000 makes the effort pointless). So poor people with good ideas couldn’t get anywhere.

So let’s regulate crowdfunding the same way. Make it another playground for the rich. That’s where this will end.

Anonymous Coward says:

“It’s essentially fraud.”

But sometimes it can be hard to know if it’s necessarily fraud or just gross incompetance.

Unlike buying something on Ebay, you’re basically ‘investing’ in research and development of something that has yet to be created. Institutional investors or donators will at least visit the recipients, examine the operations, and try to keep oversight of things to gauge progress. However, Kickstarter donators are giving money to strangers they’ve never met and trusting on faith alone that everything is just as they say. Hopefully there will be some kind of oversight in the future, especially on large projects, in which trusted “reviewers” occasionally visit fundraisers, including unannounced, and report back what they see. It’s hardly a failsafe solution, but it never hurts to let people know that they’re being closely watched.

Instead of reporting on projects sight-unseen, it would be far better for Techdirt to actually visit some of these (many Kickstarter projects based in San Francisco) and give some kind of review.

Maybe Techdirt can start its own fundraising project to review fundraising projects. That would indeed be something worth donating for!

Ehud Gavron (profile) says:

Re: [investment]

“Unlike buying something on Ebay, you’re basically ‘investing’ in research and development of something that has yet to be created.”

You’re not investing. You have NO claim on the methods, R&D, patents (if any), final device, or anything other than a promise you’ll “get one too.”

This is not an investment and thinking of it that way promotes the misunderstandings when “the investment doesn’t have a good return on investment.”

It’s a gamble. A wager. A coin-flip. You’re paying for the right to maybe get something cheaper and/or sooner and/or NEVER. No matter which way it comes out, you paid to play, you played, and you get a result.

Most people prefer a positive result (i.e. the product, either cheaper or sooner) but there are no guarantees.


Anonymous Coward says:

Re: Re: [investment]

“It’s a gamble. A wager. A coin-flip. You’re paying for the right to maybe get something cheaper and/or sooner and/or NEVER”

Is there even a single crowdfunding project that openly and plainly states anything even close to this?

A key difference we need to keep in mind is the nature of the project:

Is a donation essentially an investment(note quotation marks) in the long-term outcome of an extensive R&D (also in quotes) effort, including things like software development?

Or is it more of a quid pro quo transaction, like buying, say, a hand-knitted potholder — something that has near-zero development and tooling costs and is made one at a time?

Obviously, someone “donating” for a potholder should be far more likely to get a “return on investment” than someone expecting a working zero-gravity machine. And of course with the more ambitious research projects, it’s hard to know if actual work has been performed, or if it’s been an outright scam from the very start, since the outcome is often identical.

Anonymous Coward says:

Re: Re: Re: [investment]

Crowdfunding is more patronage, allowing someone to make a best effort attempt to carry through a project. There are no guarantees, and it is up to the patrons to evaluate the risks and rewards, and they have the Internet available to help the carry out the research. Kickstarter and the like provide a means for people to share their research, as well as fund a the project, and you put up money at your own risk.

PaulT (profile) says:

Re: Re: [investment]

“You’re paying for the right to maybe get something cheaper and/or sooner and/or NEVER.”

In my experience, you’re usually paying for something that’s not able to be funded via normal channels. There may be a good reason for this (the target is unrealistic), or not (traditional funders don’t see the market). If the reason is not a good one, you’re literally enabling something to exist that otherwise would never see the light of day.

It’s up to you as a funder to work out if the former or latter is true. If you don’t research, then you are actually gambling.

OldMugwump (profile) says:

Re: Re: [investment]

It’s a donation toward somebody’s art project. If you get anything in exchange, that’s a bonus.

Just like any donation, you need to look at who is running the project, and decide not only if the goal is worthwhile, but if the people doing it seem competent enough to complete the project.

The problem on Kickstarter is that many, many of the people running projects – although they have the best of intentions – just are in over their head. They don’t know how to manage stuff, how to spend money and time wisely, etc.

There is a reason many of them have trouble getting funded by conventional means.

The great part about Kickstarter tho is that it provides a way to test the market for a new product without committing anything – if not enough people “donate” (in anticipation of getting the product), they just give the money back and drop it.

This works great when the people running the project have a track record that shows they know what they’re doing.

But donor beware.

Anonymous Coward says:

Re: Worst Crowdfund

The “final” value of pi indeed. How about a non-linking link to save people a trip to google?

This skunk has a very bad stench, and not just because of its laughable crackpottery. The guy claims to be an experienced custom PC builder with experience going back to the 1980s, yet his website was only registered three weeks ago, right before he started soliciting for money. Even if you believed in the ‘last digit’ concept, believe that a guy who can assemble a bog-standard PC has all the skills needed to build (let alone program) a supercomputer, believe a true supercomputer can be built for only $100K, etc, etc, etc, would you trust this dude who just popped up out of nowhere?

The redditors are already taking their shots:

Anonymous Coward says:

how about the matchstick project on KS.. was funded at the end of october 2014 for almost 5 times what they were asking.. it was supposed to be an open source hdmi dongle along the lines of chromecast without the drm.. according to them it was basically done and they just needed to start producing with a ship date of 02/2015.. according to their updates everything was on track to ship on time..

they then went to ces and picked up some corporate backers and everything went downhill at that point.. no more updates until it came time to ship and they sent out an update that they were “redesigning” it and implementing drm and the delivery date was pushed back 6 months. understandably people were pissed.. this is not the product they backed..

people started asking for refunds and the company said they would issue refunds to the backers who requested them but way to many people have been waiting almost a month with nothing to show for it but alot of bullshit from the devs about how come its taking so long to return backers money..

they should have delivered what they originally advertised and started another KS project for the new version..

PaulT (profile) says:

Re: Re:

Now, this is where I actually gather some sympathy. If the project changes completely after funding, the funders should be able to get some payback because the project is no longer what they agreed to fund.

I would however argue that Kickstarter are not the ones responsible for the refund. They helped the project fund under the original terms, it’s not their fault the terms changed after their involvement. Go after the people responsible for the fraud, not the nearest convenient middleman.

Padpaw (profile) says:

Only 2 come to mind

First there is Godus where Molyneux used the funds to create something almost the exact opposite of what he asked for funds to create.

Then there is the multimillionaire who asked for funds to send her daughter to camp, then used the 20 odd grand she got on something else. The story gets more interesting as she responded to the criticism by offering to make her sons write an apology for more money.

basically she used her children to scam money off kickstarter donaters

Derek Kerton (profile) says:

Agent Smartwatch

I backed the Agent smartwatch, also due out Dec 2013. My big problem is that they just won’t die and admit the scam or a failure.

Instead, I get monthly updates full of enthusiastically positive news on all the hurdles they’ve overcome in the past month…with no comment on what hurdles or tasks remain.

I don’t care. Ship it or shut up. I accept the risk of loss. But I hate being bored to death, while being reminded of my lost money.

PaulT (profile) says:

Fortunately, I’ve never had a bad experience so far. There is one movie I helped fund that’s gone way past its original date, but this is due to the natural bullshit of the industry (distributors have demanded digital copies/DVDs not be sent out until the commercial retail date) rather than any direct fault of the producers. All the extras have been sent out as promised.

But, I’m not a moron who throws money at whatever sounds cool just because. I do my research, and understand what I’m paying for. I’m sympathetic to some of the stories shared, but you have to be a fool not to realise that there are risks involved. If 9 out of 10 projects complete successfully, then by definition that’s 9 out of 10 products that wouldn’t otherwise exist. I’m fine with the one that didn’t make it for any reason other than outright fraud, that’s the nature of the beast.

Bri (profile) says:

I did not back, but was intending to buy this product once it was out. Goblins: Alternate Realities was supposed to be a cardgame based on the comic Goblins, which is a wonderful long running comic with an entertaining storyline. The project raised $177,000 + because of the many fans, and just overall good concept. The kickstarter was being co-run by the author, but everything official was going through the owner of Evertide Games. Tarol, the author of goblins, was all gung-ho to get it made. Time went buy, and suddenly the owner of Evertide Games was not responding to emails. For a thorough account read this blog.

The recap is the guy ran off with all the money leaving poor Tarol to hang. He also had the funding from Mr. Card Game which had raised 142,000 that he took off with as well. Backers from that Kickstarter who are in Australia are looking into legal action.

Tarol had a mental breakdown which was really awful because of this, but after taking some time to himself to recover is trying to fix things by doing the game out of pocket, which is insane but he believes it is his responsibility and he is just that kind of guy. However, Kickstarter is making it really hard for him to get together a list of everyone. You can read the nightmare that is kickstarter’s response here.

I have backed quite a few kickstarters and so far all of them have succeeded and produced what was promised. But this just shows even people with credentials can screw you over. Tarol is trying to make good, but the whole thing has been a huge mental and financial strain on him and certainly darkened my view on kickstarters.

DocGerbil100 (profile) says:

I don’t think I’ve backed any real failures, as of yet. I tend to back projects that sound like they come from someone who knows what they’re doing. So far, I’ve not been ripped off.

– – – – –

A few projects do stand out as being not all that was promised.

My biggest disappointment is Godus, by British game-development veteran Peter Molyneux and his team. They promised a God Game (an old, established genre, for those who don’t know), but they delivered a mobile-phone-type game based around micropayments, something not even hinted at in the Kickstarter description. I haven’t played in a long while, so perhaps there’s a real game in there now, but I shall have to get around to playing it again before I know.

Frontier Developments’ space game Elite: Dangerous gets a mention for not delivering on the promise of an offline mode. I understand why they did it, I can see what they’ve built and are continuing to build (I play it, it’s a great game for those of us with a good internet connection), but they shouldn’t have made promises they couldn’t keep and they shouldn’t have tried to weasel out of refunding affected crowdfunders afterwards.

I didn’t back their Kickstarters myself, but US developer Double Fine Productions deserves a special mention for abusing both Kickstarter and Steam Early Access by – in my opinion – partially scamming their customers on two separate projects (Broken Age and Spacebase DF-9). I won’t buy from them again.

– – – – –

On the subject of what crowdfunding is, I don’t think any existing definition describes it adequately: it’s an investment of sorts, it’s a gamble of sorts, it’s a pre-purchase of sorts – all of these are both true and false from different perspectives and none of them give the whole picture.

It’s crowdfunding, something new and comparatively unique. The rules that should exist – but currently don’t – should reflect its special nature.

For larger, more professional and more ambitious projects, I would ideally like to see more done to assure crowdfunders that their money won’t be wasted or stolen. There should be:
• independant, professional assessments of project viability;
• better rules for clearly and exclusively defining projects, goals and progress-milestones – no-one should be making promises they can’t be sure of keeping, or using the absence of certain promises to turn a project into something else;
• minimum standards of communication, so we all know where we stand at any given stage;
• independant monitoring, so we know where our money’s being spent and we can be sure it’s not all vapourware;
• clear definitions of failure, by degrees if necessary, with clear and reasonable procedures for remuneration if some or all goals can’t be met and finally;
• clear rules and standards of enforcement by the fundhost, including pursuing violators and scammers through the courts, where necessary.

For smaller and more amateur projects, which obviously can’t afford those increased operational costs, or any project which is inherently much more of a gamble, there needs to be a very clear distinction that this is the case. No crowdfunding consumer should enter into an agreement uninformed about the risks.

It may be the case that the two kinds of project are best-served with their own, separate services and definitions. Different names for them might be wise. Pro-funding versus Risk-funding, perhaps?

Those are the basic rules, as I think they should exist, at any rate. Until such time as we have something like them, what we have now is summed up perfectly by Ehud Gavron above: whatever we’d like it to become, crowdfunding is currently a gamble. We all proceed at our own risk. 🙂

jbm (profile) says:

Mycestro=Kickstarter fail

I know that all Kickstarters are a bit of a gamble, but this project has been my biggest disappointment as a funder. Lots of project and funding mismanagement and awful communication from the creator. They’re now selling the devices on the Mycestro site, rather than sending them to funders. And they have yet to publish a timeline for developing and shipping the colored or left-handed versions of the device. Oh, and everything was due to ship in late 2013.

Anonymous Coward says:

Some Proposed Rules

One problem with fundraising sites is that they do very little to protect the people who give money. While it’s in no one’s interest to create an overbearing police state, Kickstarter, Indiegogo and other crowdfunders can take a few simple (& hopefully not overly intrusive) steps that could help reduce the possibility of neglect and abuse, such as:

1.) establishing a grading system and history of project owners.

2.) documenting and investigating complaints, and doing so publicly and transparently.

3.) Ensuring that all old projects remain online (& at the same URL) and requiring any new rounds of fundraising to list all old projects.

4.) Establishing some kind of risk rating to help fundgivers have a more realistic expectation of the odds of getting anything back.

5.) Requiring all project organizers to sign a contract that lays out all their obligations to their fundgivers, and enforcing the contract by going to court if needed, or in extreme cases, filing criminal charges with legal authorities.

The contract could include points such as:

** requiring regular correspondence with fundgivers, especially when past the due date.

** requiring some sort of basic financial accountability and transparency (“paper trail”) that would prevent large sums of money from going into a Black Hole with nothing to show for it.

** establishing strict rules for corporate involvement, such as making all signed contracts public, and offering funders immediate & unconditional refunds if the project is ever bought out. (This is important, since corporate buyouts are often done for the purpose of eliminating their competition or to raid assets such as pension funds.)

Anonymous Coward says:

Re: Some Proposed Rules

5.) Requiring all project organizers to sign a contract that lays out all their obligations to their fundgivers, and enforcing the contract by going to court if needed, or in extreme cases, filing criminal charges with legal authorities.

That proposal will eliminate the usefulness of crowd funding, by requiring the project to be much further along before they seek funding, and increase their costs by involving lawyers. It will also kill projects by taking action when they are only late on delivery.
Your proposals in general will increase the cost of crowd funding sites, reduce the number of projects seeking funding. Overall you proposals would be more likely to kill crowd funding, rather than improve it. This would be bad fr society, as it would increase the corporate grip on society by making it much more difficult for people to carry through projects outside of corporate control.
Crowd funding is in its way a means of reducing corporate control over all production and creativity in society.

Anonymous Coward says:

Re: Re: Some Proposed Rules

“That proposal will eliminate the usefulness of crowd funding … It will also kill projects by taking action when they are only late on delivery.”

Not at all. There is nothing wrong with being late — that’s expected, because most people generally underestimate the time something will take as well as the many things that could go wrong. The main thing that needs to be addressed is the kind of issues that arise when a project runs substantially behind schedule, nothing is produced or shown for the time and money spent, no excuses are given, and nothing is ever heard from the people ever again. Is it wrong to establish a standard for at least a bare-minimum level of accountability?

It’s even worse when a project gets delayed because a corporation buys out the fundraising project (or the company running it) in a secret deal that enriches one side while basically robbing from the other.

For instance, let’s say that a company like Samsung buys out the company building Super-Duper Device (that raised over 10 million dollars) because it competes with a similar device that Samsung is developing itself. And therefore, Samsung just shuts down the project and plans to give the fundgivers a copy of the Samsung device (with fewer features and more DRM) whenever it ships. Is that a fair deal or a dirty bait-and-switch, and should the original project funders have any contractual rights in the matter?

Unfortunately there are always people who see everything as a “black or white” issue, and in this case believing that the only alternative to complete anarchy is oppressive totalitarianism. This why all rules (and laws) always need to be evaluated on a cost/benefit analysis — something that’s generally overlooked — as well as being adjusted as needed rather than set in stone and ruthlessly enforced (which is, sadly, how most legal systems in the world seem to work).

Anonymous Coward says:

SYRE - from the CROOK Anyé Spivey

I cannot believe that nobody has mentioned Syre yet. Many of us believe Anyé Spivey is an out-and-out crook who never had any intention of developing a product, instead creating a campaign for the sole purpose of theft. He claimed that development costs exceeded projections and that Apple came out with a competing product so he had trouble convincing suppliers to work with him but has never released his accounting documents. The bigger problem, and the reason that many of us believe Anyé Spivey is a crook and thief that cannot be trusted, is that many people up-pledged to receive various items (iPod Nanos and Bluetooth headphones) that he claimed to have purchased but never delivered to anyone. Failing to develop a product is understandable, not excusable, and he could have requested additional funds. Failing to deliver the extra products that he claimed to have already purchased and also refusing to refund a single dollar is why Anyé Spivey is a liar and a thief, and anyone who works with him is a sucker.

Also, Anyé Spivey absolutely fails at communication and his apologies are the worst kind of evasion. Anyé Spivey refuses to take the blame.

Anonymous Coward says:

Re: SYRE - from the CROOK Anyé Spivey

“Failing to deliver the extra products that he claimed to have already purchased and also refusing to refund a single dollar is why Anyé Spivey is a liar and a thief, and anyone who works with him is a sucker.”

That story makes a fascinating read. Anyé Spivey’s Kickstarter project appears to have been a total fraud from the very start. According to him, he was so far along, the finish line was just around the corner … then nothing. Having strung people along with constant lies for so long and so far, there apparently wasn’t anywhere left to go as he had completely boxed himself in.

Typical mismanagement-related things like encountering unseen problems, running out of money, or even having to eventually abandon the original goals are somewhat understandable on any kind of project. But whenever that’s the case, then the proper course of action is to open the books, liquidate the project, open-source the software, auction off all prototypes, inventory, and other assets. Anyé Spivey claimed to have all these things in his possession — things that, like Anyé Spivey, disappeared without a trace.

A TV show like American Greed needs to do a show about Kickstarter, and Anyé Spivey’s grand larceny would be a good place to start.

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