FTC goes after fraudulent board game Kickstarter
In the first case of its kind, the Federal Trade Commission has taken legal action against a Kickstarter creator who deceived his backers.
On the surface, The Doom That Came to Atlantic City should have been a shoe-in -- a Monopoly-style board game in which you play as Lovecraftian horrors competing to take over the Earth, a labour of love by artist Lee Moyer and game designer Keith Baker, made under the banner of a brand new board-game company, Erik Chevalier's The Forking Path.
The Kickstarter crowdfunding campaign that launched in May 2012 got $122,874 in funding from 1,246 backers, blitzing its $35,000 goal. But somewhere along the line, it all fell apart. This came as a surprise to Lee and Baker -- but according to the US Federal Trade Commission, Chevalier is guilty of misrepresenting the campaign, and failing to honour both backer rewards and refunds.
In its first crowdfunding case, the FTC has issued a settlement order this Thursday, under which Chevalier is prohibited from making deceptive representations in crowdfunding campaigns, and required to honour refunds.
"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," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection.
"But consumers should be able to trust their money will actually be spent on the project they funded."
The crowdfunding campaign promised a number of rewards, including pewter figurines sculpted by Paul Komoda and a copy of the board game. Over the next 14 months, Chevalier made several updates stating that the project was progressing well. When he announced the cancellation of the project in July 2013, he claimed that, although he had spent money on artists, the formation of the company, software licenses and making the figurines, he intended to refund backers in full.
This, the FTC ruled, was not true.
"Despite Chevalier's promises he did not provide the rewards, nor did he provide refunds to his backers," the FTC's statement reads. "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."
Under the terms of the settlement, Chevalier has been permanently forbidden from misrepresenting the purposes of a crowdfunding campaign, the rewards, the progress or the qualifications of any person associated with a campaign. Furthermore, the FTC has ordered that he must honour any stated refund policy.
Chevalier was also fined a sum of $111,793.71, which was suspended due to his inability to pay. So backers still don't get refunds, and Chevalier has been ordered to do what he should have been doing in the first place, which does make one rather wonder what is the point.
The story had a happy ending for Lee and Baker, though: after the announcement of the project's cancellation, Cryptozoic agreed to make their game.