In the first case of its kind, the Federal Trade Commission has gone after crowdfunding fraud, taking legal action against a board game developer after he raised over $122,000 on Kickstarter only to use the money for personal expenses, with his funders receiving only excuses.
Erik Chevalier –doing business as The Forking Path Co. — sought money on Kickstarter to produce a board game called The Doom That Came to Atlantic City designed in conjunction with illustrator Lee Moyer and game designer Keith Baker. The game — described as a “light hearted Lovecraftian game of urban destruction” — was to be fashioned in the manner of Monopoly, with a board, cards and figurines.
As a come-on to potential funders, Chevalier enlisted sculptor Paul Komoda to create larger-sized pewter figurines as a bonus to contributors who pitched in $75 or more.
However, after 14 months, the 1,246 backers received nothing except a litany of excuses about delays until Chevalier announced on July 23, 2013 that the game was cancelled due to his “inexperience in board game publishing,” as well as “ego conflicts, legal issues and technical complications.” While Chevalier announced that he would be issuing refunds , none were forthcoming at which point the FTC stepped in.
According to the FTC’s complaint, Chevalier spent most of the money on unrelated personal expenses such as rent, moving himself to Oregon, personal equipment, and licenses for a different project.
Under a settlement with the FTC, Chevalier was ordered to repay $111,793 which was temporarily suspended due to his inability to pay at this time, however he must begin paying the money back as his financial picture improves.
Additionally he is prohibited from making misrepresentations about any crowdfunding campaign, and barred from disclosing or benefiting from his customers’ personal information.
According to Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, “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. But consumers should be able to trust their money will actually be spent on the project they funded.”