The Doom that Came to Kickstarter Now Heads to the FTC

photo-original
The Kickstarter world is in an uproar as the first case involving crowdfunding has been brought to the Federal Trade Commission. Sadly, this first case is board game related.

On June 6th, 2012 the Kickstarter campaign for The Doom That Came to Atlantic City was successfully funded. The man behind the game, Erik Chevalier, announced, on July 23rd 2013, that the project was a bust. He had raised $122,874 and according to his own statement, “After paying to form the company, for the miniature statues, moving back to Portland, getting software licenses and hiring artists to do things like rule book design and art conforming the money was approaching a point of no return. We had to print at that point or never. Unfortunately that wasn’t in the cards for a variety of reasons.” the money Chevalier raised was not enough to cover the expenses of publishing the game. He followed up by saying that he would fully refund the backers for this mistake. All rights to the game were returned to the creators so that they could find a new publisher, which they did with Cryptozoic.

In a press release by the Federal trade Commission “Despite Chevalier’s promises he did not provide the rewards, nor did he provide refunds to his backers. In fact, according to the FTC’s complaint, Chevalier spent most of the money on unrelated personal expenses such as rent, moving himself to Oregon, personal equipment, and licenses for a different project.”

Jessica Rich, Director of the FTC’s Bureau of Consumer Protection stated “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.”

The FTC’s complaint, filed June of 2015, basically states that Chevalier misrepresented what he was using the money for and under their settlement order, he was slapped with a $111,793.71 judgment that is suspended due to Chevalier’s inability to pay. The FTC is investigating his financial position and if it turns out he can pay, he will owe the full amount. On June 11th the FTC did a Q&A with twitter about the case which revealed the public’s concern over the future of other Kickstarter campaigns.

ftc

In a Kickstarter campaign update, Chevalier stated “Every step I’ve taken in the last year was in service to this game. Projects of this scope are sometimes far more complex than they seem to anyone on the outside. They take more than anyone could have guessed, the creators included.”

He also admitted “Every possible mistake was made, some due to my inexperience in board game publishing, others due to ego conflicts, legal issues and technical complications. No matter the cause though these could all have been avoided by someone more experienced and I apparently was not that person.”

According to Kickstarter’s terms of use a creator is responsible for making backers aware of how funds were used in the project as seen below.

“If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:

  • they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
  • they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
  • they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
  • they’ve been honest, and have made no material misrepresentations in their communication to backers; and
  • they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.”

jessm Jess: The true issue is not that Chevalier could not fulfill the project, but that funds from the project were misappropriated according to the FTC. This case may be a landmark in the future of Kickstarter Projects, especially ones dealing with board games. How will it affect the industry? It may be likely that smaller publishers will soon turn away from the Kickstarter model out of fear of the possibility of failing to produce after successfully funding. Larger publishers, who have the monetary means to publish with or without Kickstarter, will probably continue to use the platform as it is lucrative way to gauge interest and gain initial funding. In the end, only time will tell. Hopefully the backers of The Doom That Came to Atlantic City will get their refunds and this will serve as a word of warning to any company to be very careful where you allocate your backers funds or it might just nip you in the bud.

Related Post

Leave a Reply

Your email address will not be published. Required fields are marked *