Kickstarter’s new terms of use: fulfill your campaign promises or risk legal action

Kickstarter updated its terms of use Friday to clarify exactly what is expected of project creators and backers. The new terms clearly state that creators are required to deliver on the goods they promise, and if they don’t, they must clearly explain where backers’ money went and return any unused funds. Fail to do so, and they risk legal action.

Here’s the company’s full explanation for what a project creator needs to do to stay in line with the new rules in the case of a failed project (quoted directly from the TOS):

  • they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
  • they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that’s communicated to backers;
  • they’re able to demonstrate that they’ve used funds appropriately and made every reasonable effort to complete the project as promised;
  • they’ve been honest, and have made no material misrepresentations in their communication to backers; and
  • they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.

Those sound like obvious steps to take when strangers trust you with their money, but it hasn’t always happened quite so neatly on Kickstarter. Projects do fail from time to time, and backers are sometimes left without a peep from the company they backed.

10 minutes from "Veronica Mars"'s Kickstarter campaign -- specifically, March 13th, 8:49 AM-8:59 AM PST.

10 minutes from “Veronica Mars”‘s Kickstarter campaign — specifically, March 13th, 8:49 AM-8:59 AM PST.

The new terms of use do not attempt to cure a far more pervasive problem: late shipping. Kickstarter instructs creators to pick an expected ship date that they believe they can meet, and acknowledges that delays happen. But it’s clear that lots of companies use a closer ship date as a marketing tactic. Get more people to buy a product now and then ask for forgiveness later when it is delayed over and over and over again.

Kickstarter has spent the last year revamping its supporting materials, from its rules and community guidelines to a new page that covers safety. Crowdfunding sites are now a very mainstream way to launch a new product. More than $1 billion have flowed through Kickstarter since it came online in 2009. Trust from both backers and creators will be important if it wants to grow that number even larger over the next five years.