Credit Infocenter

Holding Crowdfunders Accountable: FTC Takes Legal Action Against Deceptive Campaign Creator

June 15th, 2015 · No Comments · Crowdfunding

by Kristy Welsh

(Last Updated On: February 26, 2018)

Holding Crowdfunders Accountable: FTC Takes Legal Action Against Deceptive Campaign Creator

When you give your hard-earned money to a crowdfunding campaign, you expect to get what you paid for. No guarantee of the project’s success, but assurance that your money is funding the project stated, and nothing more. The FTC agrees, thus its first legal action against a deceptive crowdfunding campaign creator.

“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,” says Jessica Rich, Director of the FTC’s Bureau of Consumer Protection.

“But consumers should be able to trust their money will actually be spent on the project they funded.”

About the Deception

The FTC says that Erik Chevalier set a Kickstarter campaign goal of $35,000 for the production of a board game called “The Doom that Came to Atlantic City.” This wasn’t just any board game, but one created by two prominent board game artists. This distinction helped generate enough interest for Chevalier to far exceed his goal, raising more than $122,000 toward the project.

Unfortunately for the board game’s 1,246 backers, the project never came to fruition.

After more than a year of updates sharing the project’s progress, Chevalier announced he was cancelling the endeavor.

Though he promised his backers refunds, their money was never returned, as Chevalier didn’t have it. Not because the money had all been spent on the failed project, but because it had been spent funding the creator’s personal life.

Chevalier allegedly used the board game’s Kickstarter money to pay his rent, move to Oregon, purchase personal equipment, and obtain licenses for a different project.

Backers also never received the rewards they were promised in exchange for helping Chevalier reach his goal – a copy of the board game or specially designed pewter game pieces.

For these alleged violations, Chevalier has agreed to a settlement that prohibits him from:

  • Making misrepresentations about any crowdfunding campaign in the future
  • Failing to honor stated refund policies
  • Disclosing or benefiting from consumers’ personal information

He was also slapped with a judgment of $111,793.71, but that amount that has been suspended, as he doesn’t have the money to pay it.

Crowdfunding Personal Projects

Just to be clear, the problem with Erik Chevalier’s campaign was not inherent to the use of a crowdfunding project for personal gain, but for the deception. In fact, you are free to raise funds for all sorts of personal reasons, from marriage to medical expenses. You just have to be upfront about it. Would you create (or fund) any one of these?

Tags: ····

No Comments so far ↓

There are no comments yet...Kick things off by filling out the form below.

Leave a Comment