For The First Time, FTC Takes Action Against Failed Kickstarter

Kickstarter projects not following up on promises isn’t new. The FTC getting involved, as they did with this one, is. The board game creator settled for $US111,793, though he can’t actually pay it.

The Doom That Came to Atlantic City hit Kickstarter in May 2012, looking for $US35,000. The Lovecraftian board game soared on the crowdfunding service, and eager players backed the project to the tune of $US122,874. It was supposed to ship to backers in November 2012, but months and months went by. Soon, it was well past November 2012. In July 2013, more than a year after the Kickstarter had finished, creator Erik Chevalier announced it was being cancelled.

“I never set out to con anyone or to perpetrate a fraud but I did walk into a situation that was beyond my abilities and for that I’m deeply sorry,” said Chevalier. “This has been a rough year, I never wanted to make it harder for anyone. There will be no more monthly updates, not that there have really been in some time, but I will post with each payout, as well as the post-mortem when it is eventually complete.”

Chevalier promised refunds would be sent to backers and he’d update people as it happened.

It’s not uncommon for a project to take too long or be less interesting than what was promised. When that happens, though, there are certain steps Kickstarter expects a project to take:

“There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised. If a creator is unable to complete their project and fulfil rewards, they have 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. […] The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.”

That last line hasn’t come to fruition for many projects.

Chevalier didn’t exactly start refunds ASAP. Updates were slow, and it seemed Chevalier was trying to buy himself time. Backers considered reporting the project to the Oregon Department of Justice. This prompted Chevalier to proactively plead his case, prior to any action taken.

“While they gave no promises their agent didn’t feel that I’d committed any fraud,” wrote Chevalier in a backer update. “I am going to provide them with more information and work with them to see what I need to do to make this right in their eyes. I will also be contacting any other agencies who receive reports in order to provide them with a transparent view of the scenario from all angles. This project has been a year of frustration on every level. There are things you don’t know and I can’t talk about yet without first seeking legal advice, but hopefully in time everything will be made clear.”

The rest of the update attempted to explain why the project fell apart, how previous financial failures in Chevalier’s past weren’t relevant, and promised more backer refunds were coming. He blamed PayPal’s systems, but claimed to be working on a solution with the company. People started becoming concerned his move from California to Oregon was funded by the campaign.

In the last project update, published in late July, Chevalier said the project’s highest backer had been refunded his $US2,500, and said he was working his way down through the various tiers. He also bristled at continued accusations about financial intermingling with previous companies.

“Every step I’ve taken in the last year was in service to this game,” he said. “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. I’ll post again when I’ve issued refunds to the next tier.”

That was the last update. It’s been nearly two years. This is where the FTC comes in.

The FTC says 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.”

What happened here is a fear many consumers have when they back a crowdfunding project.

It appears Chevalier is in dire financial straights, perhaps explaining why the money for The Doom That Came to Atlantic City wasn’t used to build the game. Consequently, even though he owes $US111,793 to his backers, he doesn’t have the ability to pay any of it. Thus, it’s been dropped. If he’s caught lying about his status, “the full amount will become due immediately.”

That doesn’t mean he’s going unpunished, however.

Under the settlement order, Chevalier is prohibited from making misrepresentations about any crowdfunding campaign and from failing to honour stated refund policies. He is also barred from disclosing or otherwise benefiting from customers’ personal information, and failing to dispose of such information properly.

It’s not much, but it’s something, and may serve as a warning to future crowdfunding creators.

There’s a somewhat happy ending to all of this, however. The rights to the game eventually changed hands, and Kickstarter backers were individually contacted to receive a free copy. The Doom That Came To Atlantic City is available to buy on Amazon right now, as it turns out.