As a service website Kickstarter is very successful, it seems a day doesn’t pass without hearing about some new innovative Kickstarter project either being launched or getting funded. It has enabled some great new products which possibly might not exist without it. But what happens when a Kickstarter project goes wrong? Well, I thought I’d share an example of exactly that, to illustrate how it can happen and to also bring attention to what I consider an unethical element of Kickstarters modus operandi.
So far I’ve backed 16 Kickstarter projects, totalling US$2,014 with the highest single commitment being US$585 (for the excellent Rhino camera slider/dolly) and the lowest being US$1. Most have been delivered pretty close to the projected deadline, one (the Astro camera motion controller) was maybe 8 or 9 months later than their projected delivery date and while that was a little frustrating, great communication from the project creators meant that everyone was kept up to date with why it was running late, and the ramificiations. And they have since delivered a great product.
But there was one project which looked interesting in concept, a set of inflatable tracks for a camera dolly, which could be super useful when wanting to shoot in remote locations ie when you have hand carry all your gear. Interesting enough that on 26th October 2012 I committed US$375 to it. From my perspective that is a decent chunk of funds, but based on previous experiences I had faith in both the project AND in Kickstarter. But over the following year it turned out the guy who started the project simply disappeared with US$30k of other peoples funds. And Kickstarter? Well Kickstarter basically did nothing, NOTHING AT ALL.
So Tom Baker originally estimated delivery for March 2013 and the last & final time he logged in to Kickstarter was August 2nd 2013, promising delivery 7 months late for October 2013. Then nothing…. No further communication. So this guy Tom Baker who did the runner with the $30k has been pursued, not by Kickstarter but by other people who lost their money to him. But one by one his contacts dried up – he disappeared from Facebook, so someone contacted the church that he attends. Someone else contacted a company he was partners in, only to find out he had done a runner from them as well. The local police were contacted, and credit card companies were contacted in the hope the payments could be reversed. But it seems there is no hope, I can basically kiss my US$375 goodbye and all that I am left with is a life lesson. But what is that life lesson?
Well, first Kickstarter is all care, no responsibility. As time passed many people who supported the project contacted Kickstarter support to no avail. At a certain point I got motivated & also contacted Kickstarter support – the reason for my motivation? Well as it turns out, the dodgy guy took off with most of the US$30k, but Kickstarter themselves ALSO took off with some of our money. See it doesn’t matter whether a project turns out to be an illegal fraud or a legitmate project, Kickstarter get paid regardless. When I discovered this fact I was appalled. Does it not mean that money is ‘dirty money’ and basically collected fraudulently? I can see no other answer than yes, YES IT IS! This was like rubbing salt & lemon on a cut.
I contacted Kickstarter support myself, explaining how we had been ripped off, and therefore can they please refund the illicit fee they took for the fraudulent behaviour. What I received was a series of platitudes, the first replies suggested I should contact the project creator asking for an update… My response:
Thanks for the reply.
This is clearly a case of fraudulent behaviour. Reach out to him all you like, he has not replied to any forms of communication – not just on Kickstarter, but anywhere online. There is no doubt in my mind that he has taken the money & disappeared.
> While we’re unable to issue refunds on behalf of creators
I appreciate this, but that does not include the fee that Kickstarter took, the dirty money I referred to & which your message does not address at all. As a first step I want to see that money refunded. If you do not refund it I feel Kickstarter is in effect complicit with his deception & dishonest behaviour. I have seen how banks who harbour illegal funds are forced to repay them – does Kickstarter want to be associated with that sort of behaviour?
Please do the right thing.
And their reply:
Thanks for the response. We’ve reached out to Tom to offer some best practices with regards to communicating setbacks and future production timelines to backers. I hope that this encourages Tom to break his silence and let his backers know what’s up – even if there’s no new news or good news to share.
I would recommend that you reach out to the creator again if you don’t hear from him in a while, but I would also encourage you to do so in a compassionate manner. Creators are only human, and being understanding and coming from an empathetic place may make Tom more receptive to letting his backers know about the project’s current situation.
This, after there has been no response at all, after months of people asking polite questions??? I think its a bit late to be offering ‘best practices’ FFS!
So the moral of this story: if you are going to get ripped off by someone on Kickstarter, be aware that you are also going to get ripped off by Kickstarter as well. They will take their fee regardless of fraud.
But one has to wonder why?
- are they ‘tight’ for money?
Is the cashflow of the business so scarce that they simply can’t afford to spare the funds and ‘make good’ on fraudulent behaviour by people using their website? (Note I wasn’t asking them to refund the money Tom Baker took, I just wanted the Kickstarter fee refunded) Apparently not, this article mentions in 2012 they turned over $274 million, which if you calculate based on their fee of 5% (not counting the 3% payment processing fee) = US$13.7 million in 2012. Yet they still can’t bring themselves to refund the 5% fee of the stolen $30,000! Its US$1,500 of money they have no right to have. It seems such a small amount, especially when you consider the reputation damage instances such as this one create.
- is it because there is so much fraud they can’t afford to ‘make good’ on it?
One would hope not, but if thats the case then I doubt they should be considered a platform worth risking your funds with. To puruse this line of reasoning I asked google to search for ‘Kickstarter goes bad’ – there were 19,400,000 hits! Holy sh+t! Now some of them would be Kickstarter projects that didn’t make their target (although the first few pages of results that I checked were almost all Kickstarter scams/fraud) so I tried a search for ‘Kickstarter fraud’ – 723,000 hits!
Amongst those 723,000 hits was the answer to my question, in an investigation into Kickstarter and how it handles disputes, this article provides the answer:
‘Kickstarter advisor and board member Sunny Bates doesn’t deny the risks of pledging but argues the price of individual Kickstarter pledges is so low that even if fraud did rear its head it wouldn’t be worth the legal action from a backer.’
So I interpret this to mean: we don’t have to do the right thing, because your pledge won’t be big enough in value for you to come after us via legal action. Its a bit like saying: Ethics? We dont need ethics, unless they are legally enforceable.
And one of the comments on that article nails another aspect of their facade:
“it’s funny how they say they’re not a business. Your 5% cut says otherwise.”
As I quoted above they made US$13.7 million in fees in 2012, if they aren’t a business with a US$13.7 million turnover then what are they? And how come they are allowed to make & keep some of that money when it is made via fraudulent Kickstarter Projects?
For me losing US$375 totally sucks but who knows, maybe the guy was a crack addict? Or was run over by a bus & killed or something. But surely if the latter was true, it would have been discovered by now. But what bugs me even more is the 5% fee Kickstarter took, it is a matter of principal and responsibility. But it appears Kickstarter are a bit sketchy on the principals part, and responsibility? Well, they are effectively complicit with the fraudster, thank you very much, call again!
So I guess thats it for me, I won’t be using Kickstarter ever again. And I strongly advise you to fully investigate the background of the individual people behind any Kickstarter project you might consider putting your funds into. And if you can’t find out much of their history online, do not back them.
Know this: if you get ripped off, there is nothing you can do, and Kickstarter will be of little help (but they will still profit from you)
UPDATE: interesting article at ArsTechnica: The ugly afterlife of crowdfunding projects that never ship and never end