Crowdfunding Project Creator Settles FTC Charges of Deception

Remember this guy? It looks like the FTC has caught up with him and ordered him to repay the money to his backers. The kicker? He's broke so he doesn't have to actually pay anyone back.

According to the FTC’s complaint, Chevalier represented in his Doom campaign on Kickstarter.com that if he raised $35,000, backers would get certain rewards, such as a copy of the game or specially designed pewter game figurines. He raised more than $122,000 from 1,246 backers, most of whom pledged $75 or more in the hopes of getting the highly prized figurines. He represented in a number of updates that he was making progress on the game. But after 14 months, Chevalier announced that he was canceling the project and refunding his backers’ money.

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He has been disallowed...from making misrepresentations again. Nailed it!

Yeah, I was one of those 80% who pledged at the $75+ level to get the fancier figures.

I'm also local to the project creator, so when the project was still claimed to be "on track," I even offered to buy him a beer at a local pub! In the end, I met with the actual artists behind the game, and bought *THEM* a beer. (They're awesome - they merely licensed their work to Erik, and Erik was to produce a product.)

I don't think Erik set out from the start to scam people. It comes across as an honest intention, followed by inexperience and inability to follow through. With some "Well, I'll just use a little bit of the money for this project-related expense that happens to be personal..." "Okay, so this is vaguely related to the project, but it won't hurt the bottom line..." etc. I imagine eventually, he got in deep over his head, and realized he has spent too much to get it done - then did what a lot of inexperienced, stubborn-headed folks do - lied about it while trying to dig himself out. Finally, he had to admit it.

I'm not "furious" with him, as some backers are, but I am disappointed and annoyed at his failure to tell the truth sooner. The fact that he promised refunds a year ago, and apparently hasn't even made any effort at that.

Well, as sad as the backer loss is, this is what Kickstarter (and crowdfunding as whole) DESPERATELY needs - accountability. I realize Kickstarter itself isn't involved, but the ripple effect will find its way back into the overall crowdfunding model.

Project creators have to be made responsible for promises made and money collected. It's that simple. Kickstarter was never created to be an online casino, but that's what it's turned into. And it's also why fewer and fewer campaigns are reaching their funding goals.

People can better protect themselves by using good judgement. It'd be nice if Kickstarter would require projects to present a bond equal to the goal reached in a successful KS project, and maintain it until product delivery--that way people could invest without fear (if the developer bailed the bond would refund contributors.) But apparently they don't want to do that because too few project developers would qualify for such a bond--which ought to tell people something in itself. Alternatively, Kickstarter could offer insurance through a private company for individual pledges paid--but would the premium be lower than the amount pledged? Probably not...

The FTC can't do your job for you and most of the time will not help you recoup a dime of your money. So be prudent. I fund only projects by people with good reputations whom I know from experience that I can trust. If someone offers something that is "too good to be true" it probably isn't true... Let your brain do the talking in these decisions.

I actually had the insane, crazy idea to start a Kickstarter campaign to create a company offering insurance to jilted backers. It would've worked similarly to how car or flood insurance operates.

Then I realized how much seed money that would entail (probably millions) and the devilish details that would need to be resolved. Amazon themselves would probably be none too happy about such a drive and would probably shoot it down.

Still, I think the idea in and of itself has some merit. I just wish I had the capital and know-how to pull something like that off.