...and it's a doozy of an update. Taken from the Kickstarter Terms of Use page:

When a project is successfully funded, the creator must complete the project and fulfill each reward. Once a creator has done so, they’ve satisfied their obligation to their backers.

Throughout the process, creators owe their backers a high standard of effort, honest communication, and a dedication to bringing the project to life. At the same time, backers must understand that when they back a project, they’re helping to create something new — not ordering something that already exists. There may be changes or delays, and there’s a chance something could happen that prevents the creator from being able to finish the project as promised.

If a creator is unable to complete their project and fulfill rewards, they’ve failed to live up to the basic obligations of this agreement. To right this, they must make every reasonable effort to find another way of bringing the project to the best possible conclusion for backers. A creator in this position has only remedied the situation and met their obligations to backers if:

• 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.

The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.

This basically means that Kickstarter is absolving themselves of any fault in the event of the failure of a successfully funded project, and they are now setting the expectation that backers receive at least partial refunds if a project can't be completed. This is a pretty big turnaround from Kickstarter's origins, and seems to go against the notion of crowdfunding as a financial pledge for the development of an idea rather than as a payment for a product.

And the consequences of a project not living up to those terms are...?

Long overdue. Kickstarter was becoming (has become?) a complete circus. Not that any of this sounds like it'd stop a real determined potato salad.

Disappointing and completely unsurprising.

I fully expect Kickstarter to get sued to high heaven now. It will be interesting to see if this is the change that finally invites Federal regulation to crowd funding.

Potentially being sued by your backers.

@hailinel: I disagree. They very clearly state that Kickstarter backers are, "...helping to create something new — not ordering something that already exists." Now they are just creating safe guards that mean project creators now have codified obligations to their funders and it's not just a one way street and there are extended safe guards against using Kickstarter fraudulently. If you are expecting to receive large sums of money there should absolutely be prerequisites you're willing to prescribe to.

This is strengthening the concept of crowd funding, not diminishing it.

As far as I know, Kickstarter had already long ago absolved themselves of any responsibility for funded projects not delivering. Their old terms of service and FAQ made it pretty clear that it was the responsibility of the backer to investigate the legitimacy and viability of a project. If anything, this update just explicitly states additional creator obligations that were previously just things that would be considered good form (good communication, demonstrating honest effort, accounting for fund use, refunding if possible, etc.). I view this as a step forward.

This seems like a bad idea and something that could open the door to a lot of whiny people who upon finding out that a project they backed didn't turn out exactly how they wanted to go running to try to prove how the project somehow violated this terms of service.

I believe this change simply exposes creators to to possible legal action from backers. I don't think Kickstarter plans to take any actions against defaulting creators. It's just no longer a "donate, no questions asked, no refunds for any reason" kind of thing.

@chaser324: I wouldn't be surprised if this is a response to a number of highly publicized failures on Kickstarter diminishing the trust in the system that allows it to function in the first place. As that public trust erodes I'm sure people feel less and less safe in casually donating to fund projects across the board which could have consequences for Kickstarter's business model.

For people asking "What if they don't"

The creator is solely responsible for fulfilling the promises made in their project. If they’re unable to satisfy the terms of this agreement, they may be subject to legal action by backers.

Did you actually read it? That's the last line.

And yet, if a backed project goes sideways, Kickstarter is now saying, "Oh, and backers can now sue you if you don't deliver." Delivery was never something that could be guaranteed. Even well-organized, well backed projects can fail for reasons outside of the creator's control. While it is irresponsible of creators to not keep backers informed and to fail to put the funds toward their intended use, backing a project is a voluntary choice, as is the amount pledged.

@hailinel: Backers could always sue the people behind projects, I think you're making the mistake of assuming they'll win that law suit.

Agreed. By the logic of this new terms of use, backers could have a case for suing Double Fine for what happened with Spacebase DF-9 recently. This seems like something that's only going to discourage crowd funding.

@milkman: What happened with Spacebase DF-9?

Man, that last line is rough. Something needed to happen, for sure, and this is a dramatic shift.

@milkman: @nophilip: Well, it's getting it's 1.0 release according to their website.

Big news everyone, Spacebase DF-9 1.0 will be released next month! It’s been a pleasure sharing this experience with those of you who picked the game up during Early Access and provided the feedback that helped shape it into what it has become.

Credit: http://www.spacebasedf9.com/

I couldn't agree more. This is a really uncool change that could potentially hurt a lot of honest people who simply are unable to give backers the exact rewards in the exact fashion they promised. I will almost always side with consumers on any given issue, but the nature of crowdfunding (and of the people whose projects rely on crowdfunding) is such that it really is up to funders to know to whom they're giving their money and understand that none of this is a sure thing. I mean, we're talking about products that haven't been created yet because they don't yet have the capital to do so. Nobody can guarantee that everything will go according to plan as long as they have as much funding as they think they will need.

I kind of feel like this doesn't really mean much unless someone really organizes some legal actions against a Kickstarter, unless there's some instance of it in the past that I'm not thinking of? Though if this is retroactive I could see the timing coinciding with the fact that there have been some Kickstarters which have really gone beyond the point of no return on fulfilling their commitments.

At the same time I wonder if this is going to scare a lot of devs from the service, the risk of failure is always inherit and opening yourself to legal risk might be a step too far for individuals or small companies that could stand to lose everything in that event.

The state of Washington filed a lawsuit against a failed Kickstarter earlier this year.

Just to be clear, again it has always been possible to take legal action against the people in charge of a Kickstarter project, and failure to deliver does not mean you can be sued for that even with this policy change. Winning a lawsuit against a Kickstarter project would be a Herculean legal task by the way.

@jthom252: I don't make anything that would be of any interest to anybody on Kickstarter, but you're totally right: there's no way I would create a Kickstarter campaign, now, even if I was a genius with an killer idea for a project. Now, the only people who can truly afford to start crowdfunding campaign on Kickstarter are established entities who have access to the kind of capital you'd need to withstand a lawsuit if something goes wrong with some of the rewards for your backers. So that basically means that Kickstarter has become extremely risky for the people for whom it was ostensibly created. If I was sitting on a mattress full of money, I might buy some Indiegogo stocks right about now.

@chrissedoff: If creators take any amount of precaution at all, I imagine they'll likely be able to minimize any potential damage from a lawsuit. Even just operating the Kickstarter though a basic LLC would allow you to avoid any significant personal liability.

The way I see it, these ToS updates just make it easier to pursue legal recourse against anyone that operates a campaign with the aim to commit fraud and no intention to deliver. People that make an honest effort and responsibly utilize funds shouldn't be in any real danger.

This seems like a reasonable change to address concerns over what should be expected of project creators. In the past, it was almost more like a weird donation with potential rewards, but subsequent clarifications like this really make it clear that there are formal expectations for how you will treat backers and what liability you may face if you don't hold up your end.

I can see language like this helping against those looking to use Kickstarter for scams while raising the standard for those trying to do right by their backers. It does shift further liability from Kickstarter itself, but ultimately, they are more of a platform and organizer than a partner in these projects. I'm glad they appear to be changing their terms to improve their standards and allow backers more potential recourse against fraudulent projects.

Yeah, that means essentially nothing.

Yeah, it's getting the 1.0 release but without a lot of the features promised with the Kickstarter.

http://www.rockpapershotgun.com/2014/09/18/double-fine-early-access-spacebase-df9/

Now this could happen for any number of reasons and I'm sure Double Fine wasn't trying to deceive anyone. Game development is hard and sometimes things don't go as planned. But now with this new terms of use, someone who backed the Kickstarter could say "well, I was promised this and didn't get this so I'm suing Double Fine." Not sure if they would win that case but it sets a shitty precedent and is just going to scare away developers.

Ah, I had forgotten about that one. It makes more sense in that case because it's pretty cut and dry with how they handled it, but I wonder how it would go, legally speaking, against a project that just flamed out once the devs run out of cash?

Honestly, Kickstarter themselves feel like they're doing it as a means of covering their own asses too, in case the results of some of these projects cause a real uproar in the community.

@jthom252: I can't say with certainty but to actually win a case against a Kickstarted project you would likely need to be able to prove an intent to defraud, which would mean you would need strong evidence that from the start they never intended to complete the project.

In law proving anything that involves intent is extraordinarily difficult because you'd need material evidence of a state of mind, without a paper trail of some kind you could pretty much kiss your case goodbye. Or I mean they could like buy a Ferrari or something with the money I'm sure that would be strong evidence of intent, but the point is unless you're very obviously defrauding people you should expect to be fine.

Wait, these weren't already in the terms of use? Geeeez. I guess just as it was before, be careful what you back.

Just because kickstarter says you can sue people if you want it doesn't actually change anything. That's not how the legal system works.

@chaser324 said:

Ya, this is what I was gonna say.

Honestly, there is nothing new here. They only made it clear what peoples obligations are: Kickstarter setting policies doesn't make them laws.

People could already sue you if you were negligent on a kickstarter- that doesn't mean if they did so it would go anywhere. That hasn't really changed.

Kickstarter only spelled it out for people because common sense no longer exists. Their policy always was and always will be that they have no responsibility in the legitimacy of the Kickstarters. People just don't research what they put money into and then get mad when it turns out illegitimate or they just whine when they don't understand how things in life work. Kickstarter is just updating their explanation of the fact that they are not responsible for what you do with your money.

Sort of a good thing that kickstarter is cracking down on this. Having Starforge and Spacebase DF-9 and various other kickstarter games declare themselves 1.0 without a huge set of promised features leaves just a bad taste in my mouth. It's essentially ripping off your backers.

What is Indiegogo getting away with?

I believe on that one the creators get the cash even if they fail to meet the goal.

I wonder about something. At least a third of the Kickstarter money a project makes goes into fees (Kickstarter + Amazon Banking fees) and then you pay again, depending on how the bank in your home country handles Kickstarter income. So, in reality 40+% of a successful project goes back to Kickstarter and into the Bank. It's a 0-Risk win-win for them. They chew off a lot, but expect the creators of the project to pay back the fees, in case their project fails? How can they do that, when Amazon and Kickstarter + your hometown bank take half of the money away, before it even reaches the team who does the work?

I'm outraged by how Kickstarter pretends to be an alternative and community-driven thing, but at the same time the fees are so high that only a little more than half the money a project makes actually reaches the creative people behind it. The rest goes into the deep pockets of the banks and of course Kickstarter itself. I think if a project fails, the ratio of repaying followers should be 2:1, meaning Kickstarter pays more than the team that actually did some work. Otherwise it is unfair towards people who take a huge risk, trying to live their dream. If they end up deeply in depth, while Kickstarter still makes Millions that seems like exploitation to me. So who pays back, in the end?

Not sure how you got to those numbers. A friend of mine did a kickstarter and Kickstarter took 5% and Amazon banking took 3%.

I don't know the exact wording of the previous terms, but this does seem like they are trying to put the target on the creators so they will be subject for all potential legal actions from backers. I have no idea if backers would have any success suing a failed project, but his maybe could scare away some creators? And as @s3v3n pointed out Kickstarter have a win-win situation without risk no matter what happens.

That's always been the case, though. Primarily because IndieGoGo allows stuff like charity drives.

Oh my god....what am I looking at....is that? Is that a terms of use agreement that actually defends the user instead of a corporation or company? I didn't think those existed....like unicorns or bigfoot I thought they were myth.

Imagine that.

Step up your game Google, Facebook, Apple, Microsoft, and all other blood sucking entities. Terms and Use agreements CAN be used for other things besides making it impossible to be sued.

I fund game.

I hate what was made.

I sue developer by saying product was not of the quality I anticipated.

Developer gives me money and goes bankrupt after that lawsuit turns into class action lawsuit.

It's a bad idea. If you want to be foolhardy enough with your money to toss it at something that isn't finished or even made yet, that should be on YOU and YOU alone.

It's all gray-area shit, and that's why I don't like it. The only thing that makes me happy about the crowdfunding thing is the rise of Double Fine to being indie studio extraordinaire, and the whole thing where I will get a slew of what-will-surely-be-awesome old-school-style CRPGs (Shadowrun Returns, Divinity: Original Sin, Tides of Numenura, Wasteland 2, Pillars of Eternity, etc).

That's not what this policy update says and that's not how the legal system works, this policy update doesn't suddenly "enable" people to sue Kickstarter projects, anyone can make use of the legal system if they believe the law has been infringed, even before Kickstarter says so.

Oh, geez. Yeah, that's pretty crazy.

it still amazes me how some people dont think of the risk when funding most kickstarters. your not guaranteed anything.

I should've pointed out that I was speaking from the perspective of the lowest common denominator. I personally just don't donate to Kickstarters (except for the local Wacon Convention, but that's because I know the guy that runs that and know he handles it well). Nonetheless, there are plenty of people that will do anything they can to take advantage of the legal system, and this change DOES throw that out in the open for anyone to gobble up.