> 4.15 Defendants represented on the Asylum Playing Cards Campaign website that delivery of the rewards to all backers (e.g. the Asylum playing cards themselves, as well as the various add-on rewards) would take place in December 2012.
> 4.16 Defendants have not posted an update to the Asylum Playing Cards Campaign website since July 13, 2013.
...
> V. FIRST CAUSE OF ACTION - MISREPRESENTATIONS AND THE FAILURE TO DELIVER REWARDS
...
> 5.2 In the context of operating the Asylum Playing Cards Kickstarter campaign, Defendants engaged in the following acts or practices constituting unfair or deceptive acts in trade or commerce:
> a. Misrepresenting either directly or indirectly that Backers who paid for Rewards through the Kickstarter Campaign would receive those Rewards in approximately December 2012;
> b. Failing to deliver the promised Rewards to Backers after the Backers paid money to Defendants via the Kickstarter Campaign.
...
> VI. SECOND CAUSE OF ACTION - FAILURE TO REFUND
...
> 6.2 In the context of operating the Asylum Playing Cards Kickstarter campaign, Defendants engaged in the following acts or practices constituting unfair or deceptive acts in trade or commerce:
> a. Failing to provide refunds to Backers who requested one after they did not receive their Reward in a timely fashion from Defendants' Kickstarter Campaign;
> b. Failing to offer refunds to any other Backer, whether a refund was requested or not, after Defendants were unable to deliver the Rewards to any backer within a reasonable timeframe.
And, in fact, the Kickstarter ToS acknowledges this obligation. Lengthy quote:
When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.
Throughout the process, creators owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life. At the same time, backers must understand that when they back a project, they’re helping to create something new — not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised.
If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:
they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
they’ve been honest, and have made no material misrepresentations in their communication to backers; and
they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.
The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.
DISCLAIMER: I don't think it's ok to promise and not deliver, and don't know all the merits of the case, but have so far read sections of the suit detailing facts of the case and causes for action. I'm sure there is more to it.
Section 4 outlines the facts of the case with item 4.2 stating that backers "paid for" rewards. Sections 5 and 6 are all accusations based on the "paid for" premise and the basis for the action.
This is where I have a problem with this - kickstarter is not a store. If I order from Amazon, I'm expecting that they will deliver. It's a sales transaction. If on the other hand I'm willing to help someone take a shot at doing something new, and, if successful, get some sort of reward back, that's not a store sales transaction.
The premise of kickstarter has a lot more in common with angel or seed investing than with buying stuff.
In reading through the facts section, I don't see any argument being made that the campaign was started in bad faith and the project creator is not being prosecuted for fraud. The basis of the case is essentially consumer paid for a good and that good never showed up and no refund was issued.
> This is where I have a problem with this - kickstarter is not a store.
When you take money from people that they give you in response to your solicitation representing that, if they give you a specified amount of money, you will provide specified tangible things in the future, reciting as a mantra that the venue through which you made this solicitation and received the funds "is not a store" isn't, as it turns out, a legally dispositive way of disimissing liability.
> The premise of kickstarter has a lot more in common with angel or seed investing than with buying stuff.
Angel or seed investors get well-defined things in exchange for the money they provide, but the things that they tend to be offered (which tend to be in individually, actively negotiated term sheets, which is rather completely unlike the situation in Kickstarter) tend not to be future goods.
Kickstarter might not be a store, but the legal context of many kickstarter is a lot more like store than it is like angel or seed funding.
> and the project creator is not being prosecuted for fraud.
Well, that's true in two senses:
(1) The project creator is not really "being prosecuted" at all, as default judgement was entered in July; the prosecution part is pretty much done.
(2) The specific legal language was "unfair and deceptive acts in trade or commerce" rather than "fraud", though one might consider that the common use of the latter term certainly encompasses the former. And, further, that while the specific operative language in the relevant Washington State law might be different, the usual legal definition of fraud encompasses the specific things at issue in at least the First Cause of Action in the case -- to wit, soliciting and receiving money on a false representation that certain goods will be provided in the future.
Fraud is a criminal offense. These are civil proceedings. I would much rather see criminal charges as opposed to this because of the chilling effect such precedent will have.
People who want to try a project in good faith will now think twice because they may end up being sued if the project fails.
These guys might have deserved this, but the overall effect on kickstarter community will be negative.
In law, "fraud" is the name of both a civil wrong (tort) and a crime. The same is true of lots of things -- assault, for instance, is likewise the name of both a tort and a crime -- and, while related, the two offenses have different elements (as well as different sanctions, different legal processes, and different parties who can bring actions.)
Sure, but how is this relevant to the point I'm making that for the kickstarter and crowdfunding community, it would be better if this was a criminal fraud prosecution as opposed civil commerce-related proceedings?
Its really hard to say how anything relates to that, since you've presented neither evidence nor argument supporting that point, just a bare assertion accompanied by the false statement of fact about the nature of "fraud".
It certainly seems to me to be worse for kickstarter and that model of crowdfunding in general if backers are denied recourse that is otherwise available both through direct action on government action on behalf of impacted parties through the civil justice system and restricted only to public prosecution through the criminal justice system for wrongs inflicted by firms seeking funding through crowdfunding mechanisms.
Having both civil and criminal remedies available in the same manner as they are for other commercial transactions avoids crowdfunding becoming a specially-protected haven for fraudsters, which would drive out backers, which would be bad for legitimate projects seeking to use the mechanism to fund themselves.
I'm guessing the judge here decided that people repeating "Kickstarter is not a store" doesn't actually matter when somebody obviously uses Kickstarter as a store, in the same way that the police are unlikely to care you're actually driving a motorized couch if they pull you over for speeding.
Looking at the discussion on the site, it's pretty clear that although there wasn't proof beyond reasonable doubt of the crime of fraud, the company refused to show their work - give any details about what happened to the money or why they weren't able to deliver - and the backers took this as an indication of deliberate fraud, and that was why they pressed for this lawsuit - they were retaliating against someone who as far as they could see had deliberately cheated them. As far as I know, kickstarter backers have a pretty good track record of being forgiving when the project creator shows good faith.
Apparently I'm not allowed to look at more than 4 pages without using their app. So I gave up.
I've never been a fan of Scribd but MAN that's hostle.