Thursday, June 11, 2015

FTC Cracks Down On Crowdfunding Scam

Think that crowdfunding project that is getting so much hype is too good to be true? That might just be the case. The Federal Trade Commission just made its first move to crack down on fraudulent crowdfunding efforts, saying Thursday that it has taken legal action against a project creator, who raised money to produce a board game through Kickstarter--but ended up spending most of the money on rent, personal equipment, a move to Oregon, and more. According to the FTC, Erik Chevalier had advertised creating a board game on Kickstarter called The Doom That Came To Atlantic City, raising $122,000 from 1,246 backers. Chevalier--after failing to deliver on the project--ended up cancelling the project, but did not refund the money.

The FTC said it is working on protecting consumers, and looking at new and emerging financial technology, like crowdfunding--and appears to be sending a message to other, crowdfunding projects where project creators have filed to deliver on their promises. In Chevalier's case, the FTC said he was ordered to pay $11,793.71 in a judgement; however, that's no such luck for those whose money he spent, as the FTC indicated that that order was suspended due to Chevalier's inability to pay back the money.

---