The company in question broke the terms of their contract. As such, backers are legally entitled to their money back. If the company cannot pay, the company is insolvent and may need to declare bankruptcy. That's life as a business; you need to pay your debts.
[1] As mentioned in the article, that contract changed recently. Businesses can now be absolved from their obligations by being transparent. Basically, backers for new projects are entitled to know what happened if the project fails. https://www.kickstarter.com/terms-of-use#section4
I still don't think it extends as far as the two quotes I used (the first one was the NYT paraphrasing; the second was direct).
Even in a direct customer situation, where far less "there's a chance something could happen that prevents the creator from being able to finish the project as promised" grey area exists than with KS backers, there's no entitlement to know everything about the company. And to suggest people who try, and risk, and fail aren't even eligible for barista work sickens me personally and would create enormous problems for society.
Even you are confusing customers with backers. That's the point and the problem with KS. Even the wording in the pledge suggests it's not a matter of if, but when:
"For a $200 pledge, you’re pre-ordering one of our very first machines, a $400 retail value! It can be hard to be one of the first to brave new frontiers, but don’t worry - there’s no river-crossings or dysentery in store for you, just awesome home-brewed espresso."
"Estimated delivery: Mar 2012"
You're also right that the communication from the ZPM crew seems to have been poor from the very start - a lack of capability and experience, I suspect, not a presence of malice and fraud.
If you are "sickened" by the prospect of exploring new business models, I suggest you stay away from crowd funding and avoid reading about it, for your own health.
As a business owner, and a fairly transparent one, that sickens me. In what world should customers feel "entitled to know everything" about a business.
Absolutely entitled to ask, to take their business elsewhere if they don't like the (lack of) answers, but entitled to know? No way.
This sounds to me like another group who confused Kickstarter with Amazon pre-ordering, or an investment fund where they became shareholders. You assessed the risks, took the risk to put some money down, and it didn't work out.
It's often said that Silicon Valley works, in part, because of its acceptance of failures. This is a witch hunt that says more about the hunters than those they are chasing. Good luck building the American Dream in a society where failing to deliver on a Kickstarter project means it's "entirely appropriate that he never work in technology, finance, consulting or the coffee fields (sorry, that kills the barista career) again.”