back to article FTC lunges at Kickstarter bloke who raised $120,000 – and delivered sweet FA

The FTC has brought its first lawsuit against a guy who bagged thousands of dollars from a Kickstarter campaign and failed to produce anything substantial. Erik Chevalier was accused of raising $120,000 in funds on Kickstarter with promise of developing a game called The Doom that Came to Atlantic City, but then allegedly used …

  1. x 7

    only way you're ever going to stop this kind of fraud is if the authorities insist on some kind of ransom against failure.......like having your testicles removed and put into cryogenic storage, only to be returned on successful completion of the project

    1. Mark 85 Silver badge

      So there's a case for the popular politically correct manta of "women owned businesses"!!!!!

    2. SundogUK Bronze badge

      I don't think you understand the concept of kickstarters - there is NO guarantee of success, you are making a bet on the product ever seeing the light of day. Of course, for outright fraud like this, go right ahead and have his testicles off.

  2. zerowaitstate

    I'm pretty sure I had to do that at an airport one time.

  3. johna_white

    I need to tell the FTC about my experience last week. I gave a bum a dollar because he said he was hungry.... but I am pretty sure he bought booze instead.

    1. ravenviz
      Headmaster

      Re: eschew obfuscation

      Maybe he was just using language trickery:

      "I am hungry"

      "Can I have a dollar?"

      Potentially unrelated sentences.

  4. jr424242

    Why did the FTC spend your money on this?

    The cost of this lawsuit will exceed the total "investor" losses and will recover nothing. The Kickstarter "investors" are either fools or just having fun. They are going to still get their game.

    Real investors protect themselves, and pay for their lawyers themselves when they feel cheated.

    1. Richard 26

      Re: Why did the FTC spend your money on this?

      It seems to me that it's their job to protect consumers against scam artists. Value for money is rarely a major consideration in law enforcement; it's more about deterrence.

    2. jonathanb Silver badge

      Re: Why did the FTC spend your money on this?

      They take action because it will discourage other people from trying it on.

    3. Tom 13

      Re: Why did the FTC spend your money on this?

      In this case it sounds like the guy wound up with tangible assets as a result of the scam. I'm all for the FTC seizing those regardless of whether or not someone besides the scam artist is trying to make the investors whole. Besides which, if he skates, he might try it again.

  5. Anonymous Coward
    Anonymous Coward

    flaw in so many online business models

    While kickstarter is not a bad idea, it is part of a genre of businesses on the web that succeed due to removing the need for regulation or legislation.

    Uber dodge licensing of taxis (thus reducing costs and consumer protections), job sites like peopleperhour.com and guru.com dodge employment protections for what effectively becomes their workforce and airbnb.com dodge the regulations that Thomas Cook are currently having to deal with.

    All these services can be good for the consumer, i am not against innovation and market disruption, but thinking that somehow all that red tape business had previously was just a problem and offered nothing in consumer protection at best naive and at worst eroding years of balance in industries.

    I expect some down votes for this comment, but I am just pointing out the bad sides to such online services where a small company that does little more than build a website (albeit a clever one), rake in loads of cash when the people who actually put their work or money on the line get no protection anymore.

    1. iLuddite

      Re: flaw in so many online business models

      You make a reasonable point, so no downvote from me. However, I would not be so quick to throw Kickstarter et.al. in with Uber. Uber is attacking existing business, while many (not all) crowd sourced projects are one-offs, or a way to test the viability of a new business idea without betting your house. That 80 - 90 percent failure rate for new small businesses can be discouraging. And sometimes, it just plain gets people off the couch - always good.

  6. iLuddite

    it's the US...

    Cryptozoic will be sued for patent infringement.

    Just teasing. The FTC has done a good thing. Crowdfunding is good and useful and fun. Someone needs to make sure it keeps working.

    1. erikj

      Re: it's the US...

      Upvote from me. The FTC took action because the bloke didn't actually use any funding for the project -- not because the project was risky. Of course, it's arguable that's all part of the risk.

      1. Anonymous Coward
        Anonymous Coward

        Re: it's the US...

        The issue is the hands off approach of some of the crowdfunding sites. Kickstarter is far better than IndieGoGo in that regard and you can be pretty certain that any tech project in IGG that accepts flexible funding is probably a scam. In fact it is starting to become that any major tech project that doesn't have a history or a decent company behind it on IGG could well be a scam.

        Thing is IGG know this and they set up features to encourage it (flexible funding, forever funding etc) and that attracts a lot of scammers but even if you point out that it is a scam IGG won't step in as they continue to get the money in. They feel it is nothing to do with them, that have a hands-off approach. However as the owner of Silk Road which facilitated illegal deals and, contentiously, the owner of Mega Upload and The Pirate Bay, you can't just expect to facilitate illegal activities and not get noticed.

        At some point rules will need to be tightened or these sites will need to accept some liability. The Ritot watch on IGG may well be the first to have an action against the platform. They have been informed that it is a scam but it is still getting money rolling in on a forever funding campaign ($1.6mil and counting). The comments are full of people saying it is a scam but as comments aren't shown on mobile and people believe they are 'buying' a watch then every day there is more victims. Their promoter "smart crowdfunding" has also used a shill called Bob Call in the comments to ridicule commenters who are trying to point out the scam.

        https://www.indiegogo.com/projects/ritot-the-first-projection-watch

        1. DropBear Silver badge
          Mushroom

          Re: it's the US...

          "Kickstarter is far better than IndieGoGo in that regard"

          Sorry, can't see any sign of that. They're just as happy to take their commission on any project no matter how blatantly crazy or blatantly fraudulent, dismissing and even actively discouraging attempts to notify them of any such problem by conspicuously missing options for fraud reporting in their "report a project" farce of a feedback form. Unless a project is violating copyright (you can bet they hear that call loud and clear) or has already blown up in some sort of major media brouhaha, in which case they might turn around 180 and summarily shut down the project "no comments" style.

          My prediction is they'll continue to get away with this until someone notices the opportunity and creates a platform with at least some minimal form of assurance, leaving them in the dust overnight or forced to catch up. Until then, the feedback form stays firmly attached to /dev/null. At any rate, this sets a very welcome precedent against the hordes of lunatics who insist that any money spent on crowdfunding is essentially thrown away without implying any sort of obligation. It's not, and it shouldn't be.

          1. Anonymous Coward
            Anonymous Coward

            Re: it's the US...

            You think that Kickstarter is just as bad as IndieGoGo? I'm afraid many people will disagree with you - there are plenty of reports about IGG being used as a platform specifically because it is easier for dubious projects to launch there.

            Kickstarter require a feasible, working prototype and do, at least, listen when there are significant complaints or the media get involved. They also do not have a flexible funding scheme or a forever funding scheme.

            This is how easy it is to create a fraudulent project on IGG. Think of an idea that everyone loves the idea of but is on the very outer bounds of possibility - you don't need any way of actually making it. Put together a load of photoshop, 3d images and link to science that is not really related to the actual thing you are promising. Set it up as flexible funding and put the campaign amount to be quite high and unlikely to be achieved. Get a load of people to contribute within the first few hours/days of putting it online to make sure you are on the front page. When the funding isn't raised, apologize (optional) and say that you didn't get funds to complete the project but you will be exploring other funding options to cover the shortfall try to bring it to reality next year. Walk away with all the cash pledged and never write another post again.

            Ritot did complete funding and now they just give vague updates irregularly and use the forever funding campaign to sit back and let hundreds of dollars role in each day with no work.

            1. DropBear Silver badge
              WTF?

              Re: it's the US...

              "You think that Kickstarter is just as bad as IndieGoGo?"

              Yes. Yes, I do.

              "Kickstarter require a feasible, working prototype"

              In theory. Whereas, in practice it is "You MUST have a working prototype (but absolutely nobody will ever bother you actually asking for one should you have none - we certainly won't, not even if expressly notified of that)"

              "do, at least, listen when there are significant complaints or the media get involved"

              FTFY.

              "Think of an idea that everyone loves the idea of but is on the very outer bounds of possibility - you don't need any way of actually making it."

              How many "free energy" projects running right now on KS do you want me to link to call that bullshit? Think of a number, any number...

              1. Anonymous Coward
                Anonymous Coward

                Re: it's the US...

                "Yes. Yes, I do."

                Well you are obviously quite clueless then. The question wasn't whether there were scams on Kickstarter, just whether it was as bad as IndieGoGo. The IGG platform is set up with 'features' that make scamming easier and guarantee a payoff.

                http://www.crowdfundinsider.com/2013/08/20429-most-indiegogo-campaigns-fail-and-thank-goodness/

                http://www.gameskinny.com/8ko50/scams-on-indiegogo-endangering-kickstarter-campaigns

                http://www.engadget.com/2014/11/11/anonabox-reborn-on-indiegogo/

                Quote:"What do you do when you've been outed as a fraud and your Kickstarter was pulled? You go to Indiegogo, of course"

                http://www.theverge.com/2014/4/4/5580814/indiegogo-fraud-protection-and-crowdfunding-risk

                Quote: "Indiegogo has a low threshold for listing projects for funding, as illustrated by the distinctly dubious No More Woof campaign built around a supposed mind-reading headset for dogs. Moreover, the platform’s flexible funding option — where a project collects all contributions whether it achieves its target funding or not — and the fact you’re charged before campaigns have run their course make it inherently more risky than supporting someone via Kickstarter. The latter service has already seen bad products vetted and debunked by the community during campaigns that would otherwise have been successful."

    2. Tom 13

      Re: it's the US...

      Actually I can see the potential for that (although copyright, not patent*), but from Hasbro not the Kickstart scam artist. Presumably Cryptozoic have been in the business long enough to have had their lawyers talk to Hasbro and that's all clear.

      *The board layout and cards look like a straight ripoff of Monopoly.

  7. nanchatte
    Coat

    Wait till Star Citizen falls through.... It'all take the whole kickstarter model with it.

    1. icesenshi

      I don't think it will fall through, at least not like this. Whatever is produced however, cannot possibly live up the hype (and money) invested.

  8. Stevie Silver badge

    Bah!

    There are two problems with Kickstarter that are endemic to the model: amateur business practices and unresonable investors who fail to incorporate the first problem into their expectations.

    Nothing wrong with the model, just some of the people who use it.

  9. Drefsab_UK

    RE: nanchatte

    I fail to see how star citizen could be considered to be the same. Sure its a game the may or may not live up to the hype but its a product that is being developed, the backers have had what has been promissed at every point so far and it's run by someone with a proven track record.

    I just don't see that falling through as you put it. Sure the game at the end of it may not end up being everyting everyone hopes will be but Chris is hardly run off and spent all the money on himself.

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