When Good Kickstarter Campaigns Go Bad

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Kickstarter has emerged as the go-to hub for crowdsourced funding, giving aspiring artists and budding entrepreneurs a platform to bankroll promising projects. A whopping 22,252 projects were funded through successful Kickstarter campaigns last year, raising $529 million in the process.

At its best, Kickstarter has been the springboard for the Pebble smartwatch, the Ouya video game console, the "Reading Rainbow" app and the "Veronica Mars" movies. At its worst, Kickstarter is an underbelly of funded deals that never see the light of day.

Bankrolled projects that fail to deliver the promised goods aren't necessarily scams or frauds. Some dreamers just get in over their heads, getting tripped up in the logistics of actually completing a project.

Dream Weavers

I'm 0-for-2 in my Kickstarter experiences. It's been a little more than two years since I backed a soda-making machine and a theme park simulation game. Both were supposed to be available by the summer of 2013, but two years later, neither project has seen the light of day.

To be fair, Theme Park Studio has given early access users the ability to play with a perpetually upgraded beta version of the eventual game. SPRiZZi is promising that units will finally start shipping later this month, but it's hard to put a lot of faith in a product that's already 25 months late.

Backers who have requested refunds for both projects have reportedly been cashed out by the project creators. That's a good thing, because Kickstarter claims that it's not on the hook when deals go bad.

"Kickstarter doesn't issue refunds," the site reads. "Transactions are between backers and creators directly."

"Anyone who backs a project is accepting the creator's offer, and forming that contract," the site's terms of use go on to read. "Kickstarter is not a part of this contract."

Leaving burned or impatient backers with no choice but to deal directly with project creators can get tense. There's no shortage of heated comments after updates are posted on delayed projects. This doesn't mean that it's the only way out.

The state of Washington went after the creators of the Asylum card game last year in what turned out to be the first consumer protection lawsuit involving crowd-funding. It wasn't the last. This year we had the Federal Trade Commission go after the project creator of a board game based on H.P. Lovecraft characters. The FTC settled with the creator after he failed to provide refunds.

That is the big risk with Kickstarter. You're at the mercy of project creators, just as you would be if you got a raw deal on Craigslist or any other online platform. The intentions usually aren't evil or deceptive, but it seems as if a lot of promised and funded projects just don't see the light of day. Help your odds by backing projects where creators have real-world reputations to protect. They have more to lose if they don't deliver.

If you find yourself in a situation where a project is unreasonably delayed, it's probably best to get vocal. Post in the comments section of the most recent update, asking for a refund publicly, if you don't think the campaign will bear fruit. Early refund requests are the easiest for a creator to fulfill.

More important, only bankroll what you can afford to lose. For every Kickstarter success story, there are plenty of tales of campaigns that failed to deliver on time. Support your fellow dreamer, but make sure you do it with eyes wide open.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. Try any of our Foolish newsletter services free for 30 days. Looking to kick-start your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.
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