State Of Washington Sues Deadbeat Kickstarter Manager

by Mike Futter on May 02, 2014 at 09:21 AM

Kickstarter (and other crowdfunding platforms) has been a new frontier, especially in terms of legal obligation to deliver. Projects going belly-up have peppered the news for years, but now one state government is taking action.

Washington State attorney general Bob Ferguson has filed suit against Edward Polchlopek III (also known as Ed Nash) and his company, Altius Management, over failure to deliver on the Asylum Playing Cards Kickstarter campaign. The campaign brought in over $25,000 against a $15,000 goal from 810 individuals. 

Delivery of the backer rewards was scheduled for December 2012, but nothing has yet been delivered. Of the over 800 backers, 31 live in the state of Washington, giving the attorney general reason to pursue Polchlopek and Altius for “unfair or deceptive acts of trade or commerce.”

The filing directly focuses on misrepresentation by Altius during the campaign and failure to deliver promised rewards. It also includes Altius’ failure to refund backers who requested remuneration. Ferguson is seeking up to $2,000 per infraction on behalf of the backers, including those who backed at the lowest tier of $9.

If successful, this case would set precedent that more directly binds project managers to delivery or refund. Kickstarter currently includes the following in its terms of service:

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.) This information can serve as a basis for legal recourse if a creator doesn't fulfill their promises. 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.

Prior to launching a campaign, project managers see this screen:

Click to enlarge.

Given the nature of failed projects, including Code Hero, Neal Stephenson’s Clang, American McGee’s Akaneiro: Demon Hunters, and others, this could open up many others to litigation.

[Source: State of Washington, King County Superior Court via Geekwire, Polygon]


Our Take
This has been a long time coming, and attorney general Ferguson should be commended for taking action. Too often it seems that Kickstarter project managers have great ideas and poor business plans. If this case is successful, hopefully it will ward off scam artists and force even the earnest project managers to more fully examine the business of their campaigns.