A Kickstarter campaign must repay money collected from supporters after failing to make good on promises and other rewards.
The Washington state Attorney General’s office ordered Atlius Management owner Ed Polchlopek III to pay $54,841 in restitution and civil consumer protection penalties to the state and 31 Washingtonian backers of the Asylum Playing Cards Kickstarter campaign.
Polchlopek, who also went by Ed Nash, received more than $25,000 from 810 donors in seed money for his “retro-horror themed playing card” project, promising supporters “amazing rewards.” Each of the 31 Washington residential victims will receive $688.
“Washington state will not tolerate crowdfunding theft,” Attorney General Bob Ferguson said in a July statement announcing the order. “If you accept money from consumers, and don’t follow through on your obligations, my office will hold you accountable.”
The verdict went virtually undetected by media outlets, but resolves the first case against a crowdfunding site under the Consumer Protection Act. Washington regulators filed suit against Polchlopek’s Nashville, Tennessee-based entertainment company in 2014 for failing to complete the product and refusing to give investors refunds.
Crowdfunding sites are best known for their noble potential — encouraging ingenuity and changing lives through community fundraising. But the sites also have a darker side and some campaigns have been known to rip off unsuspecting donators.
The Federal Trade Commission settled its first crowdfunding fraud case in June, ordering Erik Chevalier to repay the $122,000 he received through 1,246 Kickstarter backers to launch a board game that was never produced.
Moreover, the family of police brutality victim Eric Garner never received the more than $120,000 raised in his name on crowdfunding sites. No charges have been filed yet regarding the missing money.