The crowdfunding world got a bit more crowded this week–from a legal perspective, at least–when the Federal Trade Commission entered the fray with its first crowdfunding case against a project creator and his allegedly deceptive Kickstarter® Campaign. The FTC announced Monday on its website that it took action under Section 5 of the FTC Act against Forking Path, Co. and Erik Chevalier, alleging that Chevalier had promised to produce a board game called “The Doom that Came to Atlantic City” with the funds that consumers provided to fund his campaign, but instead used most of the $122,000 that he raised on himself.
According to the FTC, Erik Chevalier misled consumers donating to his Kickstarter project to develop a board game called “The Doom that Came to Atlantic City,” when he represented to backers that if he raised $35,000, they would get certain rewards, such as a copy of the game or specially-designed pewter game figurines. The project garnered a lot of support, and Chevalier ended up raising more than $122,000 from backers, most of whom pledged more than $75 in a bid to obtain those (apparently highly desirable) figurines. For a number of reasons, Chevalier was unable to produce the game, and announced after 14 months that he was cancelling the project. He promised his backers refunds, but then failed to provide them—which triggered multiple complaints. Instead, Chevalier used the money raised on unrelated personal expenses such as rent, moving himself to Oregon, personal equipment and other projects.
Continue Reading Don’t Doom Your Crowdfunding Project with the FTC: Keep Your Promises