Earn rewards for supporting a project you believe in? That’s what “crowdfunding” is all about.

Here’s how it works: “Creators” think of projects. To pay for those projects, they ask for small amounts of money from lots of people, usually through online platforms like Kickstarter or Indiegogo. Often, creators offer rewards to contributors. So far, so good … as long as the creators keep their end of the bargain.

The FTC just settled its first crowdfunding case against a creator who didn’t keep his promises. According to the FTC, Erik Chevalier, using the name “The Forking Path Co.,” said he was raising money to create a board game called “The Doom That Came to Atlantic City.” He promised that he’d use the money to make the game. He also promised specific rewards for contributing – like an early version of the game or pewter game figurines.

Can you guess what’s coming? Right. He never made the board game. He never sent rewards. And he never gave consumers their money back.    

The FTC’s complaint says that Chevalier’s promises were deceptive. The case offers a classic lesson in consumer protection law: when you make a promise, you have to deliver.

How can you avoid crowdfunding frauds like this? Check out the creator’s background and reviews:

  • Has the creator launched other products successfully?
  • Has the creator supported other projects? 
  • What does the creator promise?

Some crowdfunding platforms encourage their creators to follow best practices.

If you learn about a crowdfunding scam: