But in its first ever enforcement action against a crowdfunded project, the Federal Trade Commission went after a board game project gone wrong.
When "The Doom That Came to Atlantic City" hit Kickstarter in May 2012, it looked like a solid investment. Players would take the role of the Great Old Ones, the otherworldly villains of popular horror writer H.P. Lovecraft's mythos, as they wreaked havoc on Atlantic City on a board that closely resembled Monopoly.
It was the brainchild of illustrator Lee Moyer and experienced game designer Keith Baker. Paul Komoda, a sculptor with a long association with the late surrealist artist and special effects guru H.R. Giger, also committed to designing figurines for the game -- and special pewter versions for backers who committed higher amounts to the project.
The campaign initially asked for $35,000, with a $50 pledge to secure a base copy of the game and extra tiers of rewards ranging up to $2,500. After some excited write-ups, it ended up overshooting that goal, raising $122,874 from more than 1,200 people for an average of nearly $100 per backer.
But the company that was supposed to make the game, the Forking Path, never delivered. "After paying to form the company, for the miniature statues, moving back to Portland, getting software licenses and hiring artists to do things like rule book design and art conforming the money was approaching a point of no return," said Erik Chevalier, the man behind the Forking Path, in a June 2013 Kickstarter post announcing the game's cancellation. "My hope now is to eventually refund everyone fully."
But few, if any, supporters of the project ever received refunds, the FTC alleged in a complaint against Chevalier disclosed Thursday that accuses him of deceiving backers of the project. And instead of spending most of the funds raised through Kickstarter on making the game, he spent it on himself, the agency claimed. "In reality, Defendant never hired artists for the board game and instead used the consumers’ funds for miscellaneous personal equipment, rent for a personal residence, and licenses for a separate project," the complaint said.
Chevalier has agreed to a settlement order with agency. Under the agreement, he's prohibited from making misrepresentations about crowdfunding campaigns and failing to honor refund policies in the future. The order also contains a $111,793.71 judgment against Chevaliar, but it is suspended because of his inability to pay. "The full amount will become due immediately if he is found to have misrepresented his financial condition," an FTC press release said. The Post was not able to immediately reach Chevalier, who did not admit guilt as part of the agreement.
The agency declined to comment on how the incident came onto its radar, but the project's collapse made a splash on news blogs devoted to nerd culture. In a post on his blog, Baker said neither he nor Moyer ever received money from the crowdfunding campaign -- nor were they informed about the cancellation until the decision was already made.
The enforcement action is a sign that the FTC is willing to extend its consumer protection powers to the somewhat murky waters of crowdfunding. Kickstarter uses an all or nothing type of system in which projects must reach a funding goal during a specific campaign period or they do not receive any of the pledges committed to it. Most campaigns fall short, according to the statistics from the company's Web site, and backers keep their money.
But the 37 percent of projects successfully funded have raised more than $1.5 billion dollars, of which Kickstarter takes a modest cut. The "games" category has an even lower success rate, with only 32 percent of projects meeting funding goals. And projects like "The Doom That Came To Atlantic City" show that not all successful campaigns end up delivering what they promised.
Because often times projects are delayed rather than cancelled, statistics on that category of projects are hard to determine. And that risk is almost inherent to funding passion projects on platforms like Kickstarter.
But that doesn't mean project creators can deceive consumers, according to the FTC. “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, said in a statement about the Chevalier case. “But consumers should [be] able to trust their money will actually be spent on the project they funded.”
"Kickstarter creators have an incredible track record when it comes to following through on their promises," Kickstarter spokesperson David Gallagher told the Post in a statement. "But creators who abuse our system and backers’ trust expose themselves to legal action."
And ultimately, backers of "The Doom That Came to Atlantic City" got at least some of what they paid for: Another company, Cryptozoic Entertainment, rescued the game after Chevalier announced its cancellation and gave all backers a copy. But not, the FTC said in its complaint, "the other, highly-prized deliverables, such as the promised pewter figurines" from the Kickstarter.
This post has been updated with a response from Kickstarter.