Kickstarters, The FTC Can See You Now!

by | Aug 26, 2015

By CaulynDarr


You can't hide forever

The FTC came down on the creator of The Doom that Came to Atlantic City kickstarter, and they've got a warning for other creators out there using crowd funding.


Here’s what you or your business can learn from this case, so that crowdfunding does not become your “Doom:”
  1. Keep your promises when crowdfunding. If you promise rewards, give them.  If you promise refunds, provide them.
  2. Use the money raised from crowdfunding only for the purpose represented. If you collect money for a specified project, like creating a board game, use the money only for that purpose. Don’t use it for personal purposes or to start another project.
So it looks like the FTC is of the opinion that backers deserve much the same protections as any consumer would.  Just pointing at the Kickstater ToS and saying "We tried, but we don't have to give you anything," is not going to be sufficient.

I fear that Battlefront may be in trouble because of this stance.  While my personal opinion is that Dust Studios is the primary bad actor in the Operation Babylon SNAFU, the use of kickstarter funds to pay off an existing factor loan could mean trouble for them.  Well, technically trouble for both DS and BF, but DS is sitting pretty safe from the FTC in China.

Battlefront could possibly make things right by returning to the promise to compensate missing items out of existing back stock.  They should probably do that if they still can.  Though there are probably enough angry backers there that I wouldn't be surprised if any FTC complaints haven't already been filed.

Palladium is another company that probably needs to watch out.  Backers there are fuming over the lack of news for wave 2 for over 6 months.  Palladium had been towing the line that wave 2 is totally happening, but even if it doesn't, you aren't guaranteed anything.   The FTC may respectively disagree on that.  Some much delayed Palladium releases got to print after that kickstarter funded.  If it turns out that funds where conflated, that could be trouble for them.

It will be interesting to see if the FTC makes a target of any other Kickstarters in the coming months.