Deliver or Get Sued: KickStarter’s Terms of Use Are Legally Binding
Crowd-funding sites like “Kickstarter” involve serious commitments. Not just for those who pledge money, but also for those who promise to deliver the product in exchange for that money.
Case and point: the State of Washington and “Altius Management.” Altius, a Nashville-based company started by Edward J. Polchlepek III (a.k.a. “Ed Nash”), promised in October of 2012 to KickStarter users to create retro-horror-themed, limited-print playing cards. The project was successfully backed on Halloween of 2012. In fact, it exceeded its $15,000 goal by $10,000.
But the December 2012 delivery date came and went. Still no cards. By July of 2013, Nash and Altius stopped all communication with its KickStarter backers. To date, not a single consumer has received the product they paid for.
Enter Washington State Attorney General Bob Ferguson. Ferguson and the Washington State Attorney General’s office filed a lawsuit against Nash for unfair and deceptive practices and unfair methods of competition under the Consumer Protection Act. Representing the 810 backers (31 of which are Washington residents) who were ripped off by the project, Ferguson asserted, “This lawsuit sends a clear message to people seeking the public’s money: Washington state will not tolerate crowdfunding theft. The Attorney General’s Office will hold those accountable who don’t play by the rules.”
KickStarter has already changed its policies to more clearly communicate the “risk and challenges” breakdown of backing a project, which describes projects’ chances of failure, failure of funding and failure of the product even if the funding succeeds. The lawsuit underscores the importance of a website’s Terms of Use agreements – namely, how such agreements can and do have legal implications beyond mere private disputes.
The lawsuit can be found here:
