The old terms and conditions in funding a Kickstarter were very clear. Either the project delivered, or else all the backers got their money refunded. There's no "good hearted" about it in the contractual materials.

The truth is that no one's ever collected from this and there have been a lot of funded, failed Kickstarter projects that never refunded anything. Until this one.

A lot of people say Kickstarter shouldn't be like this, that no one should expect refunds. But that wasn't the way the site worked until a couple of years ago when the TOS changed.

IIRC, refund was mentioned but absolutely no mechanism (legal nor financial) was in place to ensure it happened, relying on the failing company's obligations to suffice. That doesn't work too well when the whole point is the one entity tasked with performing the refunds doesn't have any money (anymore) or means to do so.

I'm wondering myself, having payed into a project which keeps promising "almost there" and nearly a year late shows little more than a video of a lame prototype unlike what most backers expect. Trying to stay optimistic, but resigned to it falling thru - and there being no money remaining to refund.

I think this article shows exactly the mechanism to enforce it - you sue for breach of contract.

Now, for most people, getting their 20 bucks back is not worth the trouble and costs of a lawsuit. Which is exactly why the suit in this case was carried out at a higher level, taking advantage of the fact that the guy running the project as well as some backers lived in the same jurisdiction.

> or else all the backers got their money refunded

Refunded from what? If you have the money to "refund" people why would you ask for their money in the first place?

Author can refund the backers even if he does not have the money anymore. Loans, debts, etc.

Do you have a link to the old terms? I don't remember that ever being the case that they were to refund the money after the project went through.

For projects backed before Oct 19 2014: https://www.kickstarter.com/terms-of-use/oct2012

Under "Projects: Fundraising and Commerce": "Project Creators are required to fulfill all rewards of their successful fundraising campaigns or refund any Backer whose reward they do not or cannot fulfill."

> By backing a fundraising campaign on Kickstarter, you as the Backer accept that offer and the contract between Backer and Project Creator is formed. Kickstarter is not a party to that agreement between the Backer and Project Creator. All dealings are solely between Users.

I'm not convinced. The section you referenced pertains to the backing rewards only. They are, and always seem to have been, very hands-off about the delivery of the project.

The project itself is almost always also the reward.

e.g., "$50 tier, get a copy of the game"

Unless none of the reward tiers involve the project itself, and are all things like t-shirts and stickers...

I disagree. "5$ donation, get nothing" wouldn't require a refund.

The project purpose is to make a game. That's separate from the reward tier "get a copy of the game". So if the project fails, the backers who bought a copy of said game need to get a refund.

This is some interesting wording. How can a third party enter separate parties into a contract?

Do projects really setup their own contracts with their funders?

Contracts fall under civil law. There is no statutory definition of what constitutes offers and acceptance. So in this case, were I a lawyer, I'd argue that the TOS is a legal contract, and by using the site, you have implicitly agreed to the definition of contract acceptance specified in the TOS.

Whether it holds up in court is a different question, but this lawsuit at least gave a precedent.

Do you have any examples of implicit acceptance of arbitrary contracts merely through accessing a network resource?

Of course not - The contract would be made when money was exchanged, not when the site was accessed.

Sure, but the money is exchanged between kickstarter and the participants (backers and makers). The participants don't exchange directly with each other.

Yup, that is a likely counter argument to be made in court if anyone ever sues over these issues. As I said, though, this is civil law, so it would come down to how lawyers argue it and what judges think. In civil cases, answers are rarely black and white.

In this case, there appears to have been no good-hearted attempt -- the project was funded almost 3 years ago, and the fulfillment of creating was to be handled by the US Playing Card Company. This means that the only real work required was to get a batch printed, then mail them out. This was either malice or just plain stupidity on the part of the creator.

People are starting to get their cards now, but I think that has more to do with this lawsuit and the media coverage Nash has gotten for this.

But I wholeheartedly agree that if a backer makes a good faith attempt to fulfill promises, then not shipping is not a punishable offense.

I also agree - I've only backed a couple of Kickstarter's, but I'm quite certain I was explicitly told that there was no guarantee backing a project and the project being funded would result in me actually getting the rewards. On the other hand, there are many cases where people mutually agree to a contract, but that contract is not enforceable because it violates certain laws. Minimum wage, for instance. Effectively I'm not allowed to work for someone unless I'm worth a certain minimum threshold, because if that was allowed we would lose certain protections against exploitation (of course there's all sorts of room for opinions there). You can back a KickStarter, but certain governments may still hold the project to higher standards than KickStarter does.

Not malice, fraud.

Eh? Fraud is malicious.

I think this is why you should always have an LLC when you do a Kickstarter. That way if your attempt fails, the funders can sue the LLC for their money back, the judge can award it and the LLC will file for bankruptcy.

That way only people who ran their LLC recklessly (i.e. not following the LLC rules) can be held personally liable. The 'good-hearted' will simply get a bankrupt LLC on their name.

Will it matter? It seems the people most likely to be sued are exactly those for whom the LLC will offer no shield.

No, not in cases like this, given that most judges would pierce the veil in cases involving bad actors. However, given that a precedent for suing a failed Kickstarter was just set, it makes a ton of sense to form an LLC before doing a Kickstarter now, since funders may not make rational decisions about whether to sue or not if they don't get their rewards.

I would argue the precedent is now set for "bad kickstarters" not just "failed kickstarters", but ok.

100% agree.

Not spelt out well is this project is considered to be a scam though.

http://icollectplayingcards.com/back-to-the-asylum-playing-c...