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Kickstarter Crooks: The Biggest Frauds In Crowdfunding

Published On 02/19/2014 Published On 02/19/2014
Kickstarter

When the Internet got wind of a Kobe Beef jerky, thousands of carnivores heaved cash at a L.A. startup's Kickstarter. The only issue: neither the company nor the product was real. Unfortunately, stories like this aren't uncommon in the pages of Kickstarter's short history. Here are the six worst violators of our crowdfunding trust.

1. Beef jerkey made from Kobe Beef?
This project quickly raised more than $120,000 in funding — nearly 50 times the campaign’s financing goal. That’s when backers and crowdfunding evangelists began to grow suspect. It wasn’t until the “Kickstarted” documentarians hired a private investigator to look into the campaign’s creator, Magnus Fun Inc., that the scam started to unravel. They found several sketchy details surrounding the company and published their findings in a lengthy Reddit post. Soon after, the fraudulent suspicions went viral, and users began to flag the campaign. Kickstarter eventually suspended Kobe Red prior to any payment processing of finance pledges, but this was only the beginning of Kickstarter’s troubles.

2. LUCI promised to bring lucid dreaming to the masses. Instead, they brought nightmares.
The project immediately generated a huge round of financing — $330,000 before it was halted by the campaign’s creator. To this day, the Montreal-based GPX Technologies insists that the product will eventually hit shelves, having been “funded by a private financier” (internet lingo for robber baron). Give these schmucks a google and tell us it doesn’t seem like a shell company. Mercifully the $330,000 raised was returned to the 2,500 backers before it was processed. For now, lucid dreamers will have to keep dreaming.

3. Little Monster Productions lied in nearly every way possible to try getting an action video game funded.
“Our team has done a significant amount of work on the World of Warcraft series as well as Diablo 2 and the original Starcraft,” fibbed the Kickstarter project page for Mythic: The Story of Gods and Men. As it turns out, very few members of the team had any real-world experience, and many of the in-game images were jacked from a former employer. Luckily Mythic was killed tens of thousands of dollars before the campaign goal. Once again, because crowdsourcing evangelists rose to the occasion prior to the funding deadline, all 83 backers were able to keep their money.

Paramount

4. Fraud on Kickstarter isn’t limited to project creators. Case in point: user Encik Farhan.
After pledging $1,000 to a popular web comic campaign, Farhan revoked his pledge by challenging the charge with his credit card company. By the time the charge was removed, Farhan had already received his rewards from the campaign. Using the same method, Farhan cheated more than 100 Kickstarter campaigns of up to $6,000 — and that’s not including the rewards that were shipped out to him. Farhan single-handedly changed the way that Kickstarter operates its funding and rewards program, leading to Kickstarter’s partnership with Amazon for hyper secure payment processing.

This Is Famous

5. Even one of the most successful Kickstarter campaigns of all time couldn’t keep its crowdfunded gaming platform free of scammers.
After Ouya's historic $8.5 million campaign, it decided to give back to the community by hosting a Free The Games Fund, which promised to match funding raised for eligible video games being built for the new gaming console and platform. 

Enter Elementary, My Dear Holmes, a game that raised more than $50,000 before being suspended by Kickstarter. The campaign was accused of creating fake donor accounts that pledged large amounts of money to the campaign in order to make it eligible for Ouya’s Free The Games Fund. Again, Kickstarter acted quickly to mitigate the fallout.

6.  After raising $122,000, the would-be creators behind The Doom That Came To Atlantic City decided it couldn’t produce the product, walking away with a fat stack.
“Every possible mistake was made, some due to my inexperience in board game publishing, others due to ego conflicts, legal issues and technical complications,” said head of the project Erik Chevalier in a statement long after his backers’ pledges were processed. “No matter the cause though, these could all have been avoided by someone more experienced and I apparently was not that person.”

Backers of this project were shit out of luck because the project had already financed and all payments were processed. As Kickstarter clearly states on its website:  "Kickstarter does not guarantee projects or investigate a creator's ability to complete their project. On Kickstarter, backers (you!) ultimately decide the validity and worthiness of a project by whether they decide to fund it.”

MGM

Avoiding the criminals
There’s no clear-cut way to avoid Kickstarter scams, and it’s even harder to discern when well-intentioned entrepreneurs simply fall short of their original ambitions. For what it’s worth, Kickstarter has been given an F rating by the Better Business Bureau because of 12 complaints filed in the last three years. With those facts in mind, you have to ask yourself whether you’re willing to bet on a stranger’s lofty ambitions or save your money for something with better odds, or just blow it on beer.

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