Problems With Kickstarter Make News, Cause Site Revisions

NPR’s All Things Considered ran a story earlier this week asking whether Kickstarter backers get refunds when a project fails. The answer, of course, is “no”. There’s no oversight on the part of Kickstarter, and the kind of person who makes lofty plans that can’t be completed often doesn’t want to admit to failure — which giving back the money would be an admission of. As NPR says,

“That’s the conflict at the heart of Kickstarter: While the company’s policy says creators have to give refunds on failed projects, the website doesn’t have a mechanism to do it.”

Kickstarter logo

Not to mention that Kickstarter keeps its fees no matter what, so failure will cost the project organizer. Since many have gone to Kickstarter because they don’t otherwise have the funds they need, that’s unlikely to happen as well.

TechCrunch followed up the NPR piece, pointing out that the Kickstarter founders took the coverage seriously enough that they responded publicly. They’ve added more questions to their FAQ to clarify this area of accountability, but the answers don’t provide any new information, simply reiterating that they don’t take responsibility for backers getting what they paid for. I find this question most odd:

Is a creator legally obligated to fulfill the promises of their project?

Yes. Kickstarter’s Terms of Use require creators to fulfill all rewards of their project or refund any backer whose reward they do not or cannot fulfill. (This is what creators see before they launch.) We crafted these terms to create a legal requirement for creators to follow through on their projects, and to give backers a recourse if they don’t. We hope that backers will consider using this provision only in cases where they feel that a creator has not made a good faith effort to complete the project and fulfill.

What, exactly, are backers supposed to do? What good is a legal obligation if there’s no way to enforce it? Are the Kickstarter founders suggesting a class action as the ultimate enforcement mechanism? They go on to talk about how they perceive this risky environment as “a feature, not a bug”.

I don’t think this is going to be enough to quell the rising concerns, especially as more projects make millions without sufficient oversight and no products delivered. It only takes a few bad apples (getting the most attention) to ruin a tool for everyone.

4 Responses to “Problems With Kickstarter Make News, Cause Site Revisions”

  1. Alex de Campi Says:

    As someone who ran a Kickstarter project that underwent a significant enough post-funding change to make a refund offer a moral and ethical necessity, I can attest to the refund process being a colossal pain in the rear.

    We only had to refund about 15 backers but you can’t do it through Kickstarter — you have to do it through the tedious clunker that is Amazon Payments.

    Since people’s payment names are often not the same as their backer usernames (eg paid with wife’s credit card, business account, maiden name, or just like having a username like “fluffy”), you have to request their transaction ID. Which annoys people, because they just want a refund, not to dig up a 25-digit number for you.

    I think a batch refund is easier, and may be possible through Kickstarter, but in our case we did not have to do that.

    The entire Amazon Payments setup also makes refunds difficult another way too: it takes 7-10 days to put money IN to Amazon Payments, OR to withdraw. And if you try to put in more than $5k at once, 90% of the time Amazon Payments bounces it back/rejects the funding because its systems go WHOA THASSA LORRA LORRA MONEY… even if the previous week you’ve just taken $32k out of the same A.Payments account. It took us nearly a month to process refunds simply because Amazon Payments would not take back the money that had so recently come in to it. (Five attempts. FIVE attempts and endless hours on the phone with their shitty, shitty customer sevice. And finally I caved and only put in $2k and hoped I didn’t get a ton of refunds.) And if I’d done the refunds via Paypal, I would have paid double fees :/

    On the one hand, that’s good… I don’t like Paypal’s ability to just reach into my bank account and hoover out money. On the other hand…. FIVE. ATTEMPTS. TO. GIVE. THEM. MONEY.

    The systems are connected in that if you refund a backer in Amazon Payments, it does bleed back to Kickstarter and that backer stops getting your updates, etc.

    (Our project is late on digital release, but we still look like we’re going to make our print date. Our refund offer still stands.)

  2. Charles Kenny Says:

    Well it’s kind of the old caveat emptor isn’t it? I mean, a bit of common sense goes a long way in these things.

    If someone is asking for $100,000 and they’re an unknown, then they’re going to be a substantially riskier project than someone who has a proven track record and is a known entity.

    That’s why I think Kickstarter is better suited to those with some sort of fan/customer base already in place; so they are more likely avoid situations like this for the simple reason that they have a real stake in it.

    In any case, Kickstarter’s ‘all or nothing’ approach helps weed out a lot of projects that are destined for failure anyway.

  3. Johanna Says:

    Charles, I agree with you when it comes to comic-type projects, which is a kind of preorder, which the customer base is mostly used to. The biggest problems with Kickstarter right now appear to be in the technology/design sphere, where projects are about manufacturing things, because that gets so much more complicated so quickly.

    Alex, thanks very much for sharing your experience. It’s always good to hear from someone who’s actually been through the process.

  4. Andy Says:

    Wow, I never would have assumed there was a refund requirement built into the Kickstarter contract. It seems pretty clear that a KS user is investing in a project, and that the investment carries risks. Plus, when has a project failed? If it doesn’t meet its deadline, or if once past a deadline, the creator does not provide updates on the delays? I am backing several projects that are now overdue, but if everyone who backed those projects started requesting refunds, that would pretty much ensure the project fails. In other words, this whole language about refunds is pretty vague. I think that unless it is believed that a creator set out to commit fraud and bilk people of their money for no project (in which case criminal charges should be pursued), it is buyer beware.




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