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FTC Takes Legal Action Against Fraudulent Kickstarter Campaign

A drink cooler that doubles as a blender and stereo system. A card game called “Exploding Kittens” for “people who are into kittens and explosions and laser beams and sometimes goats.” A motion picture starring Kristen Bell. These are a few of the inventions and initiatives that have received the most funding on Kickstarter, the popular crowdfunding site.

Kickstarter is an online platform that allows project creators to seek financial backing. If people like a project, they can pledge money to make it happen. Funding on Kickstarter is all-or-nothing - a project must meet its funding goal to receive any money at all.

I have previously written about the tax implications of Kickstarter campaigns here.

While there’s always a risk that a project won’t make it from concept to completion, most backers have an expectation that their monetary pledge will be used in good faith and for its intended purpose.

The Federal Trade Commission (FTC) thinks so, too. In its first case involving crowdfunding, the FTC recently took legal action against an Oregon man, Erik Chevalier, who launched a Kickstarter campaign in 2012 to produce a board game, but instead used most of the funds to cover personal expenses.

Read the full blog on our technology law blog>

Categories: Crowdfunding, Financing

Photo of John W. Mashni

John brings a unique perspective to Foster Swift with his practical experience as an entrepreneur, business owner, and manager.  He focuses in the areas of business, tax, intellectual property and entertainment.

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