If you can’t deliver your Kickstarter project, do you have to pay the money back?

You need to know the legal contract you agree to when you start a Kickstarter campaign.

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Mark Pecota | CEO at LaunchBoom

If you can’t deliver your Kickstarter project, do you have to pay the money back?

If you are unable to complete your project, then yes: you will need to refund your backers if you can’t deliver your Kickstarter project.

When you launch a project on Kickstarter, you agree to their Terms of Service.

In a nutshell, you are creating a contract between you and your backers (not Kickstarter). Kickstarter simply acts as the platform that facilitates this agreement.

You can read more about it this contract here.

To save you a click, I’ll lay out the key points below.

1) You must complete the project and fulfill the rewards (to your best effort)

Simply put, you must try to create whatever you said you would in your campaign. The contract between you and your backer is only complete once this first step is complete.

2) Changes and delays are okay

There is an understanding that a creator is creating something new. With that, comes a lot of unknown variables. Backers acknowledge this when they back a project.

3) Transparency and honest communication will help

Throughout the process, the creator agrees to be transparent even if the news is less than ideal. If the project is going to be delayed a couple months, that sucks, but let your backers know through a detailed campaign update.

4) If you can’t fulfill, you must make every reasonable effort to bring the contract to completion

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.

5) Backers can take legal action against you

If you don’t follow the terms in the contract, then your backers have the right to file legal action against you. Follow the steps above so this doesn’t happen. It doesn’t sound like it’d be too much fun.

It helps to have a partner who can advise you on the steps you need to take to fulfill your project. Apply to work with us today to find out how we can work together!

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