Kickstarter Updates Terms Of Use Section Related To Failed Projects

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Popular crowdfunding destination Kickstarter updated its Terms of Use today to clarify what specifically needs to happen if a project runs into trouble and creators are unable to deliver. The terms changes come on the heels of new FTC rules which state how online retailers now have to abide by a 30-day shipping requirement, or refund customers payments if the customer doesn’t consent to further delays. Though Kickstarter itself is obviously not an online retailer, it does provide a platform where products are sold. [See update below]

It’s likely just covering its bases with these changes, to make sure it doesn’t get into any hot water when the FTC’s rules go live on December 8. [Update: Kickstarter denies an FTC connection, saying: “Our Terms update has been in the works for months and was driven by a longterm effort to make everything about them straightforward and clear.” The update is not in response to the new FTC rules, the company says.]

In Section 4 of Kickstarter’s revised Terms of Use, the company now explains that when customers are backing a project, they’re creating a legal agreement between themselves and the project creators, not with Kickstarter.

That alone could help to absolve Kickstarter from any legal action from backers who want to sue when projects go south, the product never ships, and their money effectively disappears.

However, Kickstarter took things a bit further in order to spell out exactly what is expected from creators when projects fail. For the most part, this involves communicating with the community of backers to explain what happened and why, documenting how the funds were used up or how they’ll be put to use to complete the project in alternate form, and offering a revised timeline.

Kickstarter also reminds creators that they need to be “honest” and not make “material misrepresentations in their communication to backers.” (In other words, scammers beware.)

Additionally, the terms now state that creators who are unable to stand by the promises they made in their project may be subject to legal action by backers. (The possibility of legal action has always existed, but that part was not spelled out clearly in the previous terms.)

The new Terms of Use will go into effect for all projects launched on or after October 19, 2014, the company says.

The company also notes that the updated terms have been simplified for easier reading and comprehension, with a lot of the earlier “legal jargon” removed.

You can read the changes for yourself, in full, here.