Kickstarter Changes Terms of Service for Failed Projects
After some inexplicably failed and abandoned projects since the crowdfunding’s site’s launch, Kickstarter is changing its terms of service which won’t allow project creators to just take the money and run. Now Kickstarter won’t work as a pledge with no legal obligation to complete the project as promised but now will open up project creators to the possibility of legal action.
Kickstarter announced the changes to the Terms of Service in an email to site users on Friday. They said that the new ToS is re-written to make the language more clear for everyone and to clarify what is expected from each project.
The ToS now explicitly states that creators are now legally obligated to complete the project and fulfill all the rewards promised for backing a funding campaign. Kickstarted also took the opportunity to clarify that they are not party to the pledge agreement. Their position is that they just facilitate the process of funding a project and that any funding is a legal agreement between the project creator and backer.
The big changes to the Terms of Service come for failed projects. There is a very extensive, highlighted section of the Terms of Service related to what happens when a project fails. If a project fails after receiving money, creators must explain what happened, show how the money was used and attempt to complete the project with a revised timeline, alternate form or a refund to backers. They will also be subject to legal action from backers should they take it to that level.
Here is the above noted Terms of Service in full:
If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:
- they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
- they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
- they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
- they’ve been honest, and have made no material misrepresentations in their communication to backers; and
- they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.
The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.
The new Terms of Service will go into effect for projects launched on or after October 19, 2014.
And, no, I don’t think this means that you can sue if you don’t get the hug promised as a reward at the $1 level.