Kickstarter issues new rules for failed projects

But risks for backers remain.

Mar 1, 2020, 8:54 pm*

Business

Miles Klee 

Miles Klee

As the best-known crowdfunding platform, Kickstarter is also often tacitly considered the most reliable. But three years into its existence, about half of its projects were still failing. In 2014, it’s not uncommon for users to cry “scam,” and even celebrities can’t count on success.

Finally, just days after sci-fi author Neal Stephenson killed off a historical swordfighting video game with half a million dollars behind it because the end result “wasn’t very fun to play,” the site announced a change to its terms of service to clarify “what’s expected from backers, what’s expected from creators, and what needs to happen if a project runs into trouble.” 

“When a project is successfully funded, the creator must complete the project and fulfill each reward,” the new section emphasizes. If they can’t do so, they must take all reasonable actions to placate their presumably pissed-off backers. Some examples are provided:

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.

Stephenson and other creators have taken exactly these steps without having them outlined in advance, well aware of the potential for lawsuits filed by backers (also alluded to in Kickstarter’s terms), giving refunds to those who request them and trying to pivot toward different, related projects. But as Ars Technica points out, the “alternate form” language would likely allow a creator to sever all contact and “keep a project in eternal development hell.”

In that light, the onus remains on backers to appropriately assess risk—but many appear to think of Kickstarter as a cutting-edge retailer rather than a hub for startup investments that don’t always pay off. They may want to familiarize themselves with Section six of the TOS, in which Kickstarter thoroughly washes its hands of all liability in these arrangements.  

Or, you know, spend their money on stuff that already exists.

H/T Ars Technica | Photo by Images Money/Flickr (CC BY 2.0)

Share this article
*First Published: Sep 22, 2014, 2:41 pm