Consumer Protection needed in existing crowdfunding sites

The recent incredible success of Kickstarter and Inidgogo  is a testament to the collective power of individuals to help turn ideas into reality.  Crowdfunding has arrived into the mainstream as a means of raising captial for conceptiual stage ideas, as demonstrated in this week’s episode of IFC’s Portlandia.

10% of the films screened at the Sundance Film Festival received some portion of their funding from Kickstarter.  Just this past week not one but two project received over $1,000,000 in funding from that same platform.  Across the pond, the movie Iron Sky received 900,000 euros in seed funding to help launch it’s production.  This is wonderful right?  We should all feel really good that in our current economic conundrum, ideas are still being funded, whether the banks want to fund them or not,right?

Well, it depends.  Right now we are in the heyday of crowdfunding.  We have yet to meet the Bernie Madoff of Kickstarter.  Or the AIG of Indigogo.  Don’t worry, with time they will come.  With national headlines praising how much capital has been raised through crowdfunding, the hucksters will be attracted to these platforms as a means of marketing slick ideas with no real intention of ever following through.  Which leads to the point of this rant.  What accountability do websites such as Kickstarter have to the crowds that fund the ideas?

To the best of my knowledge, and please correct me if I am wrong, currently kickstarter simply provides the platform to collect funds.  It does not ensure that the representations made by the artists, film makers, or tech start ups, will ever actually come to furition.  This is a problem.  Imagine if Ebay, Amazon, Fab, Gilt, or any other platforms for selling goods did not take steps to ensure that the goods being promised would ever be delivered.

We can call websites like Kickstarter a platform for crowdfunding, but recently its has seemed more like a platform for marketing goods before they are created.  Amazon pre-sells books all the time, but it also makes sure those books get to the buyer  Should Kickstarter be held to the same duty of care that other online platform-shops are held to?.

Presently on these crowdfunding platforms, Filmmakers can sell fans a DVD of the movie before a single scene is shot.  Game makers can represent that they will send the first shipment of their incredible innovative game to the funders who give at the $50 level.  That is all well and good if they do.  But what if they don’t?  Who takes the blame?  As of now, these platforms dont.

Should crowdfunding platforms take some responsibility for the deliverables that are being promoted on their website?  Yes.