Kickstarter Has A Huge Problem, And It Could Destroy Them

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“You know,” someone said to me in 2010, “my husband and his buddies are thinking of setting up a fake project on that website, Kickstarter, get the money and just never make the product”. No way, I thought. They can’t just do that. Kickstarter would go out of business if people could do that.

My friends were only joking, of course, but they weren’t the only ones who thought about it. And others weren’t kidding. The Wall Street Journal reported a scam project recently, so did The Verge, so did Mashable. Trust me when I say that these are just the ones who got caught.

See the reason why I looked into this in the first place, was because I got scammed myself. I backed an iPhone 5 case project called “Radius Case” by the “company” Mod-3. My card got credited about 12 months ago. Not only have I not received my case, but my emails, comments on their Facebook, Twitter and even Kickstarter page have received but one reply – also about 12 months ago. The way this particular company got away with their scam is that they have actually sent a few cases out. Reading the comments however, you will very quickly realize that most users have in fact not received their cases.

I am not a big “Terms and Conditions” guy, but a few seconds of scanning Kickstarter’s terms, and the loophole stared at me right in the face.

  1. The Estimated Delivery Date listed on each reward is not a promise to fulfill by that date, but is merely an estimate of when the Project Creator hopes to fulfill by.
  2. Project Creators agree to make a good faith attempt to fulfill each reward by its Estimated Delivery Date.
  3. Kickstarter does not offer refunds. A Project Creator is not required to grant a Backer’s request for a refund.

“Merely an estimate”, “Good Faith”, “Attempt to fulfill rewards”. Some projects get tens of millions of dollars pledged to them, and all that Kickstarter has to offer is the Honor System. No promises, no deadlines, oh, and no refunds either. All you have to say as the Project Creator to get away with it is “I will eventually send my product”.

What happens however when your project becomes irrelevant? Taking the Radius Case as an example, what happens if Apple stops selling the iPhone 5 one year later and you bought cases with the purpose of re-selling them? Or, what happens if you simply decided to buy a new phone one year later? (which, lets be real, in this day and age is very logical to do). Well, tough luck.

kickstarter Kickstarter Has A Huge Problem, And It Could Destroy Them

I personally did not pay too much money for the Radius Case, however there are projects out there that charge a lot of money for their products. There are also backers who decide to invest a lot of money in projects. $10,000 pledges are not uncommon.

To make matters worse, Kickstarter has no direct email, phone number or any other means that you can contact them directly. Their contact page is nothing but FAQ links, as well as links back to your project so that you can contact the Project Creator (who wasn’t responding in the first place). You can of course “Report a Project” through a form, but speaking from experience, you will not get contacted back there either.

As Kickstarter grows it will get much harder to control their users. Scammers will eventually find a way, and they will be successful. In my case, Mod-3 got away with merely $50,000. If nothing changes however, a much larger fraud will eventually take place, and I sure hope they are prepared for it.

Will they survive their next big crisis? If they have their lawyers and crisis communications teams ready, they might. All I can state as a fact for now is that they have permanently lost me as a customer.

Angelos is enthusiastic about all things tech and innovation. He is a big fan, and an advocate, of interdiscipline collaboration. He holds a BS in Construction Management, a Minor in Business Management and is currently working toward completing his MS in Project Management and Corporate Communication.

  • josh

    Hear, hear! Kickstarter is a heartless money-grubber when it comes to scams. They’ll publicly and proudly proclaim they fight scammers, but only the ones that cost them money — e.g. like the one describe by the article in “The Verge”. They don’t look out for the pledgers in the same way, e.g. letting this project creator walk away with $30,000+ https://www.kickstarter.com/projects/baker/airtracks-inflatable-all-terrain-camera-slider/

  • https://twitter.com/konstant_g George Konstantakopoulos

    Based on a published study potential fraud is below 5% for kickstarter.com (Mollik, 2013). The most significant problem for their reputation is actually project late delivery since only 23,4% deliver on time. But in their T&C they clearly state they have no responsibility. So from my perspective there is no actual risk for Kickstarter.com and since 10M users on average per month visit the website I find they have no problem. The question raised is for amazon; will they acquire kickstarter?