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Law Acts Over Kickstarter Campaign that Didn’t Deliver

So far people who have used crowdfunding to help back their game development have been able to hide behind the prospect that their project may not be completed as a shield. It looks like the law may not agree with their point of view.

The case brought against Edward J. Polchlopek III, also known as Ed Nash was based on the Asylum Playing Cards Kickstarter campaign. It appears that the campaign that was started in 2012 raised $25,164 from 810 backers, of which 31 were from Washington State where action was filed. The campaign promised a printed deck of cards and other items that were used as incentives to entice people to back it.

The problem with the campaign arose when the promised cards and rewards were not provided to the backers, and no communication has been made with the backers since July 2013. Kickstart’s terms of service states:

“When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.”

With these terms of service being broken, the Attorney General’s office filed a lawsuit against Polchlopek, which has been a success and will result in him and his company, Altius Management having to pay $54,851.

This payment is based on the $668 in restitution to the 31 Washington state backers, $31,000 civil penatlies ($1,000 per penalty), and $23,184 in cost and fees. Attorney General Bob Ferguson, said this about the case:

“Washington state will not tolerate crowdfunding theft,” said Ferguson. “If you accept money from consumers, and don’t follow through on your obligations, my office will hold you accountable.”

This may be a case that anybody who starts a Kickstarter campaign should take notice of. Failed campaigns always tend to annoy backers and are newsworthy but this may be the first time that the law have stamped their heavy foot on proceedings.

What are your thoughts on the situation? Should Kickstarters and other crowdfunders be careful with their campaigns from now on?