Justin Mitchell thought he was contributing to a worthwhile investment when he made a $160 donation to mPrinter, a portable thermal printer that was campaigning on the crowdfunding site, Kickstarter. What he received were false promises and a product that was neither completed nor fulfilled its duty to refund his money.
Unwilling to let others fall victim to crowdfunding scams, Mitchell, a web designer and developer, started his own site, kickscammed.com, hoping to expose fraudulent Kickstarter campaigns so that the public becomes more aware of these scams.
“I had gotten to the point where I lost the most money in one sitting on that project, and that was just the last straw. I had to do something,” Mitchell said.
Mitchell is representative of thousands of backers on crowdfunding sites like IndieGoGo and Kickstarter who have been duped out of their money – a total that has exceeded an estimated $27.7 million as of May 2015 – attempting to fund projects that could not deliver or had no intention of delivering their promised products.
Exposure of these scams has come to the forefront in recent years. Recently, the Federal Trade Commission successfully settled a case against a scam perpetrated by Eric Chevelier, showing the governments willingness to crackdown on people preying on the generosity of others.
However, Mitchell feels that there are bigger fish to fry.
“Kickstarter has created a platform and they’ve just backed out completely, and in essence have created a platform for scam artists to thrive,” Mitchell said of Kickstarter’s refund policy. “There’s no process for the creator to go through the refunds, none of the money is held in escrow; there’s just no way from them to do it.”
Another problem that Mitchell points out with Kickstarters is their policy of taking 5 percent of the money donated to successful campaigns – even ones identified as scams.
“Kickstarter made money off of [Chevelier’s project],” Mitchell said. “He’s being sued for failure to deliver, but Kickstarter got to keep all the funds.”
Though Mitchell has made it his goal to expose scams and revealing holes in crowdfunding platforms’ refund enforcement policies, it is not his only aim. He also holds awareness in high regard and does not hesitate to spread a message of caution when contributing to campaigns.
“Looking up the creator’s name, Google search the images, and check the comments before you back a project,” Mitchell says of the steps to take. “Take the time to go through back through those comments and see if there’s people saying, ‘this isn’t real.’”
Mitchell may have been a victim, but his resolve to prevent anyone else from falling into the same trap he did may help the community recover from its latest outbreak of frauds.