September 6, 2012

Kickstarter Responds About Failed Projects And Refunds

Michael Harper for redOrbit.com — Your Universe Online

Earlier this week, one NPR program asked a very common question among online adults: “When a Kickstarter campaign fails, does anyone get their money back?”

To find their answer, NPR spoke to the founder of recent Kickstarter hit, Ouya. Ouya is an open sourced video game console and platform which recently blew past their project goal. In the beginning, Julia Uhrman and Ouya asked for a hefty $950,000 to get their project off the ground. By the time the dust had settled, backers had pledged $8.6 million to fund the video game console. Ouya is expected to be released next March.

But what if Uhrman and her team weren´t able to deliver a product in March, or at any time? What if the project, even with $8.6 million in funding, is a complete failure. Does Uhrman have to give this money back to the pledgers?

"Technically, from the Kickstarter perspective, I actually don't know the answer to that," said Uhrman, speaking to All Things Considered.

"But from a doing-the-right-thing perspective, we will treat our backers the best possible way."

A day after this story aired, Kickstarter gave their own answer in a blog post entitled “Accountability on Kickstarter.”

“We take accountability very seriously at Kickstarter, and the questions raised by NPR are important ones,” writes Peter Chen, Yancey Strickler and Charles Adler for the Kickstarter blog.

“We've addressed a lot of these questions through the press and in various places on the site, and today we want to go over how accountability works on Kickstarter.”

The crowd-sourced funding site admits to screening projects before publishing them online, but does so only to make sure the project doesn´t go against their company guidelines.

Past that, says Kickstarter, a projects viability is left up to the judgement of the backers.

"Kickstarter does not investigate a creator's ability to complete their project," reads the blog.

"Backers ultimately decide the validity and worthiness of a project by whether they decide to fund it."

All Things Considered found an example of a failed Kickstarter project called PopSockets. David Barnet founded PopSockets, a company which aimed to produce an “iPhone case with expanding buttons for propping, gaming, holstering, headset management, and looking good.”

After his campaign became fully funded, Barnett set about making these iPhone cases, but ran into some trouble. Several months after the campaign closed and after Barnett promised to have the cases shipped, there are no PopSockets. According to NPR, much of the money given by the backers (the majority of which gave $25 to $40) has gone to pay lawyers and prospective manufacturers.

Unable to produce these cases, Barnett decided to pay back 40 of his 520 backers.

"I think it sets a bad precedent," said Barnett.

"Once I did that, I could tell that it started creating the impression in some of my backers that they had purchased an item. And I think as Kickstarter grows, there's more and more of an impression that it's just a big store for people to go get deals."

As for Kickstarter, they´ve effectively thrown their hands up in this issue, encouraging the project creators to speak directly with the backers if any problems arise.

“If the problems are severe enough that the creator can't fulfill their project,” reads the blog, “creators need to find a resolution. Steps could include offering refunds, detailing exactly how funds were used, and other actions to satisfy backers.”