Crowdfunding sites such as Kickstarter involve individuals or entities seeking to fund projects from consumers or investors, and they have become frequent generators of quick cash for entrepreneurs. There is a lot that goes into creating a game, whether online or board game, places like Kickstarter offer a great place for game creators to receive funding for their projects. Most of the people who start Kickstarters do have the knowledge required to make a game. For instance, if they were to make an online casino game, they would require a lot of expertise on how to not only build the game and ensure it works for their players but continue to cater to their players’ needs. You can read this Love Bug article on online game creation to see what goes into developing and programming an online game. However, when it comes to online crowdfunding platforms, some creators often underestimate the amount of time and resources needed to develop a game for audience consumption. This is where most of the pitfalls appear because while there is a way to interact with their backers, some projects fail to make their deadlines, and others fail after they are funded. New backers to crowdfunding often ask the same question: How can consumers be sure that these project creators are legitimately applying crowdfunds for the intended purpose?
The Federal Trade Commission is just now adding crowdfunding abuses to its list of enforcement actions. In the first such case, the FTC said Thursday that it has taken action against the deceptive tactics of a Kickstarter project creator who raised money from consumers to produce a board game.
According to the FTC’s complaint, Erik Chevalier, also doing business as The Forking Path Co., sought money from consumers to produce a board game called “The Doom That Came to Atlantic City” that had been created by two prominent board game artists. Chevalier told potential backers that if he raised $35,000, they 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.
In a number of updates, Chevalier announced that he was making progress on the game. But after 14 months, Chevalier said that he was cancelling the project and refunding his backers’ money.
According to the FTC, Chevalier did not provide the rewards, nor did he issue refunds to his backers. In fact, the FTC alleges, 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.
“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 able to trust their money will actually be spent on the project they funded.”
Under an FTC settlement order, Chevalier is prohibited from making misrepresentations about any crowdfunding campaign, and from failing to honor stated refund policies. He is also barred from disclosing or otherwise benefiting from customers’ personal information, and failing to dispose of such information properly.
The order imposes a $111,793.71 judgment that will be suspended due to Chevalier’s inability to pay. The full amount will become due immediately if he is found to have misrepresented his financial condition.