Washington State Sues Kickstarter Entrepreneur For Failure to Deliver

Sometimes, fully-funded Kickstarter campaigns will run into production problems. Do backers have any recourse?


Since its launch in 2009, Kickstarter has become a novel and interesting way to bring your project or product to market. But as simple as it seems, the site has not been without its challenges. When you become a backer, the question still remains: What are you really getting?

Well it better be what was promised, according to a Washington State lawsuit. State Attorney General Bob Ferguson filed a suit against Ed Nash of Altius Management for an alleged failure to deliver on any of the promised merchandise from his Kickstarter campaign for retro-horror themed playing cards, among other things for backers who paid for.

The campaign was fully funded on October 31st, 2012 and it seems that not a single backer has received their due. If Ferguson wins the case, at least 31 backers from the state of Washington will receive their money back, and Nash could be charged up to $2,000 per violation under the Consumer Protection Act, writes Joe Silver for Ars Technica.

Sometimes, despite running a successful campaign, production problems arise. Kickstarter’s terms of use are very clear — that’s a problem for the creators, not Kickstarter. The site merely acts as a facilitator of the agreement between creator and backer. But by its nature, Kickstarter can make users who have invested their money into seeing something brought to market feel very tied to creators and projects.

And backers seem to have the wrong sentiment. Backing a Kickstarter is not like buying stock, or investing in a company other than during one production run. If a user invested in the Oculus Rift Kickstarter, and a lot of people did, then the most they are owed is the reward for paying $5,000 or more.

Kickstarter does a lot to protect itself from lawsuits with a robust Terms of Use and a hands-off approach to individual projects. Users who get short-changed can only hope to get their money back through lawsuits; a cash investor would potentially get nothing if the venture failed. So there’s protection, but you receive no equity. There might be in the future, but it probably won’t be with Kickstarter.