Kickstarter scams, frauds and lawsuits

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Kickstarter scams, frauds and lawsuits

Post by Smoove_B »

Since we didn't really have a general thread about it AND it's come up a few times in the game-specific topics, I figured it would be good to share this story which seems to been discovered from an effort put forth by members of the SomethingAwful forums, linked at RPS:
- God character art is from here, just with a sepia filter applied.
- Backgrounds are from here and here.
- Poster consists of this icon on top of this texture.
- Their sword reward pictures are from here.
- The reward tier text and values are copied wholesale from The Banner Saga's kickstarter, with just a game name search & replace.
- Their office photos are just crops from the Burton Design Group.
Clearly it was inevitable and it definitely reinforces the caveat emptor nature of Kickstarting games, however it doesn't change how I feel about supporting projects started by known entities.
Last edited by Smoove_B on Fri May 02, 2014 7:11 pm, edited 1 time in total.
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Re: Kickstarter scam

Post by silverjon »

Bear in mind that the scammer had to not get caught for whatever their funding window was set to (30-90 days?) and get at least $80,000 in pledges to receive any funds at all. Incredibly ham-fisted attempt.

One of my filters for projects is to see what the creator has backed. Because good artists usually care about what others are doing, and support them in whatever way they can.
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To be fair, adolescent power fantasy tripe is way easier to write than absurd existential horror, and every community has got to start somewhere... right?

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Re: Kickstarter scam

Post by Zarathud »

I would not be surprised if Anonymous appointed themselves Kickstarter cops as a "piblic service."
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Re: Kickstarter scam

Post by hepcat »

I truly believe that amongst the users who contribute to Kickstarter projects, there's always going to be a few internet detectives savvy enough to ferret out the con artists. It's like any project that a company invests but with a heck of a lot more people looking for problems. Sure, some may slip through, but I'm confident that will be a miniscule number in comparison to those that succeed. I've had nothing but satisfied experiences with the system so far.

edit: Found a link in the RPS article for something. oh dear lord, I want this. :wub:
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Re: Kickstarter scam

Post by hentzau »

hepcat wrote:edit: Found a link in the RPS article for something. oh dear lord, I want this. :wub:
I found that a few weeks back. I resisted. But it was so very, very hard.
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Re: Kickstarter scam

Post by hepcat »

Yeah, with Origins and Gencon coming up soon, I'm going to hold off. But daaaammmmnnnn....
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Re: Kickstarter scam

Post by Zarathud »

My resistance failed last night, mostly because a 100% plastic watch makes my metal allergy is a non-issue. Plus, my co-workers have started noticing how often I pull out my phone (to read forum posts) while waiting to start meetings. Maybe checking my watch would be more discreet.
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Re: Kickstarter scam

Post by Smoove_B »

Washington State Attorney General announces lawsuit against Kickstarter project for failure to deliver:
The project beat its original $15,000 goal to raise $25,146 by the time it ended in October 2012. The Attorney General's office alleges Polchlepek and Altius collected the money and neglected to deliver either the cards or the various backer rewards. Some of those backers live in the state of Washington, which allows the state's legal team to get involved.

"Consumers need to be aware that crowdfunding is not without risk,” stated Washington State Attorney General Bob Ferguson in a press release announcing the lawsuit. “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowdfunding theft. The Attorney General’s Office will hold those accountable who don’t play by the rules."
Should be interesting to see how this shakes out...
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Re: Kickstarter scams, frauds and lawsuits

Post by $iljanus »

Smoove_B wrote:Washington State Attorney General announces lawsuit against Kickstarter project for failure to deliver:
The project beat its original $15,000 goal to raise $25,146 by the time it ended in October 2012. The Attorney General's office alleges Polchlepek and Altius collected the money and neglected to deliver either the cards or the various backer rewards. Some of those backers live in the state of Washington, which allows the state's legal team to get involved.

"Consumers need to be aware that crowdfunding is not without risk,” stated Washington State Attorney General Bob Ferguson in a press release announcing the lawsuit. “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowdfunding theft. The Attorney General’s Office will hold those accountable who don’t play by the rules."
Should be interesting to see how this shakes out...
Hmm, different state but I wonder if a lawsuit is in the cards for the company responsible for the Up Front and Airborne In Your Pocket Kickstart...
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Re: Kickstarter scams, frauds and lawsuits

Post by Smoove_B »

Clearly you haven't been following along on BGG. :D

The parent company is located in Canada and the creator (Rik) has mysteriously relocated to Australia. That money is gone.
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Re: Kickstarter scams, frauds and lawsuits

Post by Holman »

Smoove_B wrote:Clearly you haven't been following along on BGG. :D

The parent company is located in Canada and the creator (Rik) has mysteriously relocated to Australia. That money is gone.
I thought the money was actually frozen by the court?

I lost track of the legal details a long time ago, but while the creator seems to have run, he wasn't able to take the money in doing so. I think the Kickstarter money is locked down. Eventually most of it will go to the suing party owed $250,000 by the creators, and the rest will go to lawyers.

What's certain is that I'll never see my money or my game.
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Re: Kickstarter scams, frauds and lawsuits

Post by Smoove_B »

Yes, I think you have it correct. I probably should have been clearer - it's gone from the hands of the guy(s) making the game.
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Re: Kickstarter scams, frauds and lawsuits

Post by $iljanus »

Smoove_B wrote:Clearly you haven't been following along on BGG. :D

The parent company is located in Canada and the creator (Rik) has mysteriously relocated to Australia. That money is gone.
Oh...I wasn't aware of the Australian part. All I wanted was Airborne In My Pocket. It seemed so close :-(
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Re: Kickstarter scam

Post by TiLT »

Smoove_B wrote:Washington State Attorney General announces lawsuit against Kickstarter project for failure to deliver:
That sounds to me like it's more of a lawsuit against Kickstarter projects that deliberately fail to deliver, but I may be mistaken. That's what crowdfunding needs. Someone who can document their efforts and subsequent failure, and who both have a sensible plan and can show how the money was used, should be fine. Anyone who can't, should be investigated thoroughly. I suspect the role of crowdfunding in society is only going to grow over the coming years, so there has to be a clear set of rules for such projects, and sooner rather than later.
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Re: Kickstarter scam

Post by Smoove_B »

TiLT wrote:That sounds to me like it's more of a lawsuit against Kickstarter projects that deliberately fail to deliver, but I may be mistaken.
That I really don't know and I'm not sure how much the deliberative nature plays into it. I don't get the impression that he took the money and never had any intention of making the cards or that he collected the KS money but then realized it would cost twice as much so he disappeared. Amazingly I'm not part of that project so I don't know the full story.
That's what crowdfunding needs. Someone who can document their efforts and subsequent failure, and who both have a sensible plan and can show how the money was used, should be fine. Anyone who can't, should be investigated thoroughly. I suspect the role of crowdfunding in society is only going to grow over the coming years, so there has to be a clear set of rules for such projects, and sooner rather than later.
I absolutely agree and I still think this will be one to watch.
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Re: Kickstarter scam

Post by baelthazar »

Smoove_B wrote:Washington State Attorney General announces lawsuit against Kickstarter project for failure to deliver:
The project beat its original $15,000 goal to raise $25,146 by the time it ended in October 2012. The Attorney General's office alleges Polchlepek and Altius collected the money and neglected to deliver either the cards or the various backer rewards. Some of those backers live in the state of Washington, which allows the state's legal team to get involved.

"Consumers need to be aware that crowdfunding is not without risk,” stated Washington State Attorney General Bob Ferguson in a press release announcing the lawsuit. “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowdfunding theft. The Attorney General’s Office will hold those accountable who don’t play by the rules."
Should be interesting to see how this shakes out...
I probably should not talk about it more than this, but I was contacted as a backer by the Federal Trade Commission to discuss the Doom that Came to Atlantic City Kickstarter scam.

On a positive note, Cryptozoaic did a wonderful job picking that up and publishing it. My copy was delivered a few months back. The minis are some of the highest quality and best sculpts for Lovecraftian gods that I have ever seen.
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Re: Kickstarter scams, frauds and lawsuits

Post by Smoove_B »

Crowdfunding creator settles FTC charges of deception:
In its first case involving crowdfunding, the Federal Trade Commission has taken legal action against the deceptive tactics of a project creator who raised money from consumers to produce a board game through a Kickstarter campaign, but instead used most of the funds on himself. The defendant has agreed to a settlement that prohibits him from deceptive representations related to any crowdfunding campaigns in the future and requires him to honor any stated refund policy.

Crowdfunding involves individuals and businesses funding a project or venture by raising funds from numerous people, often via dedicated online platforms. 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.

“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.”
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Re: Kickstarter scams, frauds and lawsuits

Post by baelthazar »

Basically they fined him +$100,000 but they commuted the fine since he has no money. So... Nothing really came of this other than confirmation that he was a scammer. No refunds expected.
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Re: Kickstarter scams, frauds and lawsuits

Post by Max Peck »

The BBC ran the Chevalier story today as tech news, because "Internet" I guess. It pretty much sounds like he is getting away with a slap on the wrist and literally being told not to do it again.

OTOH, it's not all bad. I got to see this, on the BBC, while having my morning coffee and browsing the news:
Image
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Re: Kickstarter scams, frauds and lawsuits

Post by hepcat »

I think the court's hands are tied on this though. For one thing, there's an inherent risk factor to any kickstarter that I believe falls under the heading of "buyer beware". For another, the guy is broke. We don't really have a debtor's prison system. Which is unfortunate when it comes to guys like this.
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Re: Kickstarter scams, frauds and lawsuits

Post by Smoove_B »

I think it's more about setting a precedent. I mean, he was clearly smart enough to spend the $100,000 before the courts forced him to account for it. But I'm also guessing his ability to borrow money do anything even remotely similar in the future has been completely removed.
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Re: Kickstarter scams, frauds and lawsuits

Post by Max Peck »

Somebody needs to update that graphic so that it says "The Doom That Came To The Doom That Came To Atlantic City".

Or is it too soon?
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Re: Kickstarter scams, frauds and lawsuits

Post by baelthazar »

Max Peck wrote:Somebody needs to update that graphic so that it says "The Doom That Came To The Doom That Came To Atlantic City".

Or is it too soon?
Well, we did end up getting the game and it was still rather well produced. The only thing I did not get was the pewter figurines, but that is not a huge loss.
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Re: Kickstarter scams, frauds and lawsuits

Post by Max Peck »

baelthazar wrote:
Max Peck wrote:Somebody needs to update that graphic so that it says "The Doom That Came To The Doom That Came To Atlantic City".

Or is it too soon?
Well, we did end up getting the game and it was still rather well produced. The only thing I did not get was the pewter figurines, but that is not a huge loss.
True that. And yet, I am loathe to let a suboptimally happy ending interfere with that which amuses me...

"The Doom That Came To The Doom That Came To Atlantic City That Was To Be" would be more accurate but probably too wordy. (Shut up, you! 100% is a kind of probability.) Besides, at that point I'd want to squeeze in a Shakespeare reference and go with "The Doom That Came To The Doom That Came To Atlantic City That Was To Be Or Not To Be", which may actually still be accurate if one were to assume that he was dishonest about the project from the beginning.
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Re: Kickstarter scams, frauds and lawsuits

Post by baelthazar »

Since both of those statements are needlessly wordy, they fit perfectly with the Lovecraftian aesthetic. You just need to add some extra long and esoteric adjectives and adverbs.

"The Stygian Doom that Teneberously Came to the Doom that Came in the Strange Aeons to the Doom that Came to Atlantic City." That sounds like a sentence Lovecraft would have written.
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Re: Kickstarter scams, frauds and lawsuits

Post by Max Peck »

Well played sir, well played indeed. :)
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Re: Kickstarter scams, frauds and lawsuits

Post by Kasey Chang »

I've paid down into 5 projects, only one was done and on-time. Two are pending (one with beta key already), two others are meeting delays.

Exodrive, the SD card reader case has been delayed for months. It was supposed to be delivered in July, it's now August and the guy haven't gotten full production yet. Apparently he had to build a part picker bot, and switching to flexible PCB as well as dealing with temp issues caused delays. At this rate I won't see the case until October, IMHO.

The other, a keychain electronic multitool (remote buttons, triggers, matching app, battery, USB plugs / sync cable, etc.) is also delayed, apparently they're not sure they want to ship the product with only a 2400 mAh battery.

The two pending games are Formula Fusion and that starbase game. Formula Fusion already passed out some beta keys for backers.
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Re: Kickstarter scams, frauds and lawsuits

Post by MonkeyFinger »

Those don't really seem to fall into the "scams, frauds and lawsuits" category, however.
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Re: Kickstarter scams, frauds and lawsuits

Post by hepcat »

To be honest, that's not what I would call outrageously missed deadlines. All those seem par for the course for most projects.
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Re: Kickstarter scams, frauds and lawsuits

Post by coopasonic »

Grim Dawn - estimated delivery August 2013
Hero-U - October 2013

Hero-U just ran a second kickstarter to fund the rest of development with a March 2016 target. What's a few years among friends?
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Re: Kickstarter scams, frauds and lawsuits

Post by Carpet_pissr »

I am really getting pissed about the tenor of the Hero-U messages, which I rarely read. I vaguely browsed the one they sent when they were asking for more money, but it's quite whiny.

I liken it to a horrible restaurant experience from last week. My mother-in-law was visiting, as was a random nephew, and my aunt and uncle decided to take us all to dinner (all being my immediate 5 person family, and the two visitors). Sounds like a big table, but this was a HUGE restaurant, easily capable of handling multiple large parties all at once.

Long story short, the newbie-ish waiter was horrific. It took a crazy amount of time to get our food (my SALAD, came out about 1 hr in) Forgot to put the orders in, kept blaming a 30 top, the kitchen, etc. At some point his apologies were just becoming insulting. I felt like saying "just shut yer yammering and wheedling, and go get our shit done instead!" The line had been crossed where it was better if he had just remained silent instead of incessant apologizing.
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Re: Kickstarter scams, frauds and lawsuits

Post by coopasonic »

Yeah Corey is not a PR man at all.
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Re: Kickstarter scams, frauds and lawsuits

Post by Carpet_pissr »

coopasonic wrote:Yeah Corey is not a PR man at all.
That does not bother me with Kickstarters. I don't expect these supposedly creative geniuses to also be marketing types.

However, I do have SOME semblance of expectation that they should know their limits, time frames, SOME idea of expected costs, etc. If they aren't confident in those things, they really have no business doing a KS IMO. Of course they CAN, and do...but results are usually...well, like this one, exactly.

And I can even stomach this one a little because it was started rather early in the KS days, but someone doing this TODAY? I would have no patience.

There have been enough people that have gone before and made the same mistakes in this genre even, that for someone not to pay attention to those same obstacles at this point in time would be much less excusable IMO.
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Re: Kickstarter scams, frauds and lawsuits

Post by TheMix »

I had to stop reading the Shadows of Brimstone updates. Talk about whiny. At least the main game got delivered. I have doubts about whether I'll see everything else though.

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Re: Kickstarter scams, frauds and lawsuits

Post by hepcat »

Shadows of Brimstone does bug me, I will say. I recently heard that the latest shipping update for wave 2 is this time...next year. :doh:

If they'd simply sold it as subscription instead of an all in one package, it might not have stung as much. But as of now, I'm going to be waiting about 2 to 3 years for one game to finish.
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Re: Kickstarter scams, frauds and lawsuits

Post by baelthazar »

hepcat wrote:Shadows of Brimstone does bug me, I will say. I recently heard that the latest shipping update for wave 2 is this time...next year. :doh:

If they'd simply sold it as subscription instead of an all in one package, it might not have stung as much. But as of now, I'm going to be waiting about 2 to 3 years for one game to finish.
Yeah... this really irked me too. I think they should have done a second KS or something. On the flip side, Cthulhu Wars took some 3 years or so to finish, but is getting the second wave out in the same year as the first. Thankfully they switched fulfillment companies!
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Re: Kickstarter scams, frauds and lawsuits

Post by Smoove_B »

And a little over a year later, State court orders game creator to pay $54,000 for failing to deliver:
As Polygon notes, this likely sets a legal precedent for taking action against people who run successful Kickstarters and don't deliver the goods, though some of the backers of this project reportedly began receiving decks of cards in June, shortly before the court issued its ruling in July.
Breakdown of penalty:
Nash and Altius Management have been ordered to pay their 31 backers in Washington a total of $668 in restitution, as well as $23,183 in legal fees and $31,000 (a grand per backer burned) in civil penalties for violating the state Consumer Protection Act, but it's yet unclear whether they've actually done so. Gamasutra has reached out to the Washington state Attorney General's office for further details.
In summary, lawyers get paid and state takes a cut. USA! USA! USA!
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Re: Kickstarter scams, frauds and lawsuits

Post by hitbyambulance »

coopasonic wrote:Grim Dawn - estimated delivery August 2013
it is quite delayed, but Act III (original ending) is done and Act IV (stretch goal) is being worked on now. they say they're getting it finished by the end of this year.
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Re: Kickstarter scams, frauds and lawsuits

Post by Kasey Chang »

Update on the stuff I paid into...

Formula Fusion has a partial game up and running, got key already.

Starbase Halcyon is... still being worked on.

Exodrive SD card case seem to be coming along, though at this rate I don't know if I want it for my current phone... or next phone. :D

The keyTag thing has been cancelled outright by the developer... They said the battery is useless and they are going to give partial refund. *sigh*
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Re: Kickstarter scams, frauds and lawsuits

Post by hepcat »

Not a scam, fraud or lawsuit...but an interesting opinion piece by the guy behind Tasty Minstrel Games on Kickstarter.
In A Weird Place...
Kickstarter, do we need it? Really?
This question comes to us from our current project for a first expansion to Kings of Air and Steam and a reprint of the game... Which, has a little more than 2 days to fund and is only a little more than half way there.

In relation to Kings of Air and Steam: World's Fair and the reprint... If the Kickstarter project fails, then we will not have another project, and will print the game when we have the excess cash on hand. This means that we would be looking at a late 2016 release at the earliest, probably more like 2017.

Do we need Kickstarter? Yes, TMG does need Kickstarter... But we could choose to not need it...

So, what the heck does that mean? Let me unpack the concepts at work here, which fall into these categories:
• Financial
o Cash Flow
o Security
• Behavioral
o Focus
o Expectations

Financial
Cash Flow
Our incoming cash flow has never been stronger in the existence of TMG, but our outbound cash flow to support 5 employees is high but sustainable. The pre-sales and collection in advance of our expenses allows us to be able to print more games and in a wider variety.

Consider this example... This is not how we accounted for funds from the Kickstarter, but we certainly could have accounted for them in this way.

Consider that after we funded Orléans for over $250,000, we had the cash required to deliver the games now even though delivery was 7 months away. The delivery cost allocation is approximately $59,370.

Between funding Orléans and delivering it, we manufactured and launched Flip City (no Kickstarter, and a more simple game to make). The total cost to make all the Flip City is a fraction of the delivery cost allocated for Orléans.

With strong sales at GenCon, online pre-orders, and good sales in the first 2 months, Flip City has already produced more revenue than the cost to make it. We have a little more than half of the print run left, and all costs covered.

This could have been funded from the additional cash on hand (but not yet needed) associated with Orléans...

Security
Our cash flows are strong, and our finances are stable. However, printing a game that doesn't sell will put serious pressure on this. Even doing this only once can create a serious problem. Right now, TMG has a decent amount of what I can "unhealthy inventory" which is simply games that we have too many of when compared to the quantity that sells on a regular basis.

Actively working to convert this "unhealthy inventory" to cash is a key activity that is getting more concentration these days. "Unhealthy" doesn't mean bad, for example, a couple of years ago I would have considered Belfort (which is now quite healthy, and a wonderful game) to be unhealthy inventory.

One of the keys to keeping this "unhealthy inventory" low is to not make those games in the first place (or the extra quantities). A failed Kickstarter clearly says to us, "be careful if you print this game later, because it might not sell and end up being unhealthy inventory". A Kickstarter that barely funds communicates a need to keep printing quantities low.

TMG does not have a gold mine game like many other established publishers, we have no game that we know can fund our operations. As such, we are always only a couple of failed games away from serious trouble...

Behavioral
Focus
TMG makes many different games. That is a fact. If we concentrated more heavily on the games that are already showing significant success, then we could probably have one of those gold mine games (Dungeon Roll / Harbour / Scoville / Eminent Domain / Flip City / Cthulhu Realms are the most likely candidates).

Part of the problem is that as gamers, we cannot help ourselves. I promise that we won't make a game that we think is bad, but if we think a game is very good, then we are likely to move forward with it.

If a game doesn't prove to us that we should concentrate on it, then we will not focus our attention on it. Heck, we should have made 2-4 more Dungeon Roll boosters than we have so far based on how well it sells...

TMG needs to have opportunities for gamers to tell us what we should do. We see that with sales numbers, and with Kickstarter, we get to see a portion of those numbers before the game is ever manufactured.

Expectations
Finally, we have set the expectation that TMG uses Kickstarter. It is one of the best ways that we can promote and market a game. It is mostly common knowledge that we do this, so moving away from it is more difficult.

Consider that it is a very different set of customers and behavior that needs to happen if TMG does not Kickstart a game. TMG needs to convince retailers to purchase the game to sell to their customers.

Or we need our customers to pre-order the game from their retailers instead of waiting for it to be on the shelf. So that the retailers realize that the game will sell for them.

Consider that TMG sold approximately 7,000 copies of Harbour via Kickstarter. My recollection is that 5,500+ were inside of the United States. When Flip City and Cthulhu Realms launched recently (also $20 games from TMG) we did not even sell that many games combined on launch...

We did hear about difficulties finding Flip City in particular though. So, it is a very different behavior that pulls games through the distribution system.

Conclusion
Indeed TMG has enough financial stability to publish games without Kickstarter. But we wouldn't be able to do the following:
• Publish as many games that we love.
• Be distracted by new titles instead of just expanding old ones. Requiring us to become the Dungeon Roll or Eminent Domain company.
• Employ a robust team of 5 individuals who are improving many aspects of TMG, and thus your experience dealing with us.
This year, TMG published the following games without using Kickstarter, Gold West, Steam Works, Luna, Flip City, Cthulhu Realms, Dungeon of Fortune, and more titles planned for next year.

So, we could publish without the use of Kickstarter, but why would we? Kickstarter provides significant benefits that few should dare to ignore...

Cheers,

Michael

P.S. - If Kings of Air and Steam World's Fair doesn't fund, then it will probably still be made, but it likely becomes a project for a 2017 release. But that is a long time from now, and things could change...

Covfefe!
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