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Can I Sue a Kickstarter?

Yes, you may be able to sue the creator of a Kickstarter project. If you are a backer of a project who doesn't get their reward, you may be able to sue for breach of contract, fraud, or for violation of a state consumer protection statute. You may even be able to bring a class action.

If you are a company that already has a copyright or patent on the product or processes used to make a product, you may be able to sue the creator for infringing your intellectual property rights.

Suing Kickstarter itself is almost impossible because you are contractually bound by its terms of use.

“Get Off My Lawn" — An Example of a Kickstarter Campaign

Suppose you're scrolling along on your social media account on your iPad and you run into a post by a guy named Dave. Dave is an entrepreneur who has started a Kickstarter for a videogame called “Get Off My Lawn." You are intrigued, so you watch the video. The game looks awesome! You get to spend your time yelling at pesky neighbor kids! All the fun, but none of the danger of your house getting egged.

So you head over to Kickstarter to check it out. According to the website, if you send $65 and the campaign is fully funded, your promised rewards will be a custom pair of black Get Off My Lawn socks and a copy of the card game version with collectible playing cards. You think this is too good to be true, so you sign up for a Kickstarter account, plug in your credit card information, and click. You've contributed to a Kickstarter campaign for the first time.

Then you wait, crossing your fingers and praying that there are enough others like you who crave this game. Thankfully, you're not alone. Within days the campaign is fully funded!

You check the mailbox every day, hoping that your black socks arrive, only to be continuously disappointed. You keep checking the website, only to find that the production date keeps getting pushed back. You're frustrated, but you really want to play this game. So you wait. 

Months and months go by. No black socks, and no game. Then Dave stops updating his production date. You finally realize that you're never getting the socks, let alone the game. Is there anything you can do to get your money back?

Yes. Although tracking down Dave may be difficult, with a lawyer's help you may be able to bring a lawsuit.

What Is Kickstarter?

Let's start at the beginning. Kickstarter is a way that people with creative ideas can get funding to develop a product. It is a web-based crowdfunding platform that uses a reward-based model, acting as an intermediary between an individual with an idea (a “creator") and a potential source of funding (a “Kickstarter backer"). As a crowdfunding website, Kickstarter makes fundraising easy for entrepreneurs.

Backers can search a number of categories on Kickstarter to find crowdfunding campaigns to back. Since its launch in 2009, Kickstarter has hosted more than 250,000 successfully funded projects backed by more than 20 million total backers who have pledged more than $6 billion to fund projects.

How Does Kickstarter Work?

Here are the nuts and bolts. When a campaign begins, the project creator has to set a funding goal. That goal is supposed to be enough to see the project funded.

During the campaign, backers can sign in and promise to pay a certain amount of money at the end of the campaign. This promise is called a pledge. In exchange, backers receive rewards, which are often, but not always, the final product. In our example, the rewards are both the socks and the game itself.

If the campaign is successful, backers are then charged for their pledge using Kickstarter's payment system, and the money is sent to the Kickstarter startup. If the funding goal is not met, backers aren't charged and the creator receives no money. No need to worry about refunds.

According to Kickstarter's Terms of Use, which creators must agree to in order to use the platform, creators are bound by contract to fulfill backer rewards if the campaign is successful. Creators are also required to keep in touch with backers about any delays in development or reward distribution using Kickstarter's update and comment system.

You Can Sue If a Creator Doesn't Deliver Your Reward

In our example, Dave essentially disappeared. If you can find him, you can sue him under at least three legal theories:

1. Breach of Contract

A contract is a promise or set of promises for the breach of which the law provides a remedy. It requires the mutual assent of the parties and the exchange of something of value. Contracts generally have three elements:

  • A promise
  • Acceptance of that promise
  • A bargained-for exchange of something of value, which the law calls consideration

To sue for breach of contract, you generally need to show the following:

  • A valid contract
  • You performed your promises under the contract
  • The other party failed to perform their promises and breached the contract
  • You suffered damages as a result of that failure

In our example, you promise to pay money if the campaign is fully funded in exchange for the reward of black socks and the game. When the campaign is funded, your card is charged, and Dave gets the money. By failing to give you your rewards Dave breaches the contract, so you would be able to file a rather straightforward breach of contract claim against him.

If you know where Dave is, you may be able to handle this on your own in small claims court. Keep in mind that your state limits the time in which you can bring a claim. As we discuss below, it may be worth it to talk with an experienced class action lawyer about whether your claim may be bundled with that of the other backers Dave ripped off.

2. Fraud

A second legal theory you may be able to use is common law fraud. To show fraud, you generally have to prove the following:

  • A false statement of material fact by the creator
  • Knowledge on the part of the creator that the statement is false
  • Intent on the creator's part to deceive you
  • Justifiable reliance by you on the statement
  • Injury to you as a result

Making out a fraud claim here is more difficult than showing a breach of contract. Although you would be able to show reliance and injury, the hard part would be getting inside Dave's head and showing knowledge that he wouldn't send you the rewards and an intent to trick you. It's doubtful he'd admit to it.

With a lawyer's help, you may be able to find evidence that would establish all of the five elements. You may be able to recover not just the $65 you are out, but punitive damages to punish Dave for his misdeeds. If you believe you have been the victim of fraud, consider consulting with an experienced personal injury or business and commercial lawyer.

3. State Consumer Protection Statutes (Laws)

A third possible avenue of relief may be a state consumer protection statute. Almost all states have statutes that prohibit unfair and deceptive trade practices, and many allow for the recovery of not just your damages but also punitive damages and attorneys' fees. If you want to learn more about whether you might have a claim in your state against a creator for the violation of a consumer protection statute, speak with a consumer protection attorney in your area.

Could You Bring a Class Action Against a Creator?

You might decide it's not worth suing someone over $65, but you're mad at Dave for swindling you. You may be able to bundle your claims with those of the other backers into what is known as a class action.

In general, in a class action the parties representing the class — here it would be you — sue on behalf of the entire group of injured people. Suing Dave in a class action might make it far more worth it than simply suing for your $65. Class actions are very complicated, so if you really want to get back at Dave and file a class action, you should speak to an experienced class action lawyer. You will need a specialist.

Can You Sue Kickstarter Itself?

You may be really upset and blame Kickstarter for Dave's bad behavior, but you won't have a legal claim against it.

Kickstarter is a platform, not a store. When you use Kickstarter's website, you agree to abide by certain terms that are included on the website. This forms what is known as a browse-wrap contract.

Kickstarter's Terms of Use specifically state that your contract, should you decide to pledge, is with the creator, not it. In fact, it goes further. Kickstarter expressly disclaims any warranties that you will have a successful experience. Trying to sue Kickstarter itself would probably be a waste of effort and money.

What About Third-Party Claims?

Now suppose you're not one of Dave's backers but have already made your own game called “Get Off My Lawn" which looks a lot like what Dave is promising to provide. You may be able to sue Dave for violating your intellectual property rights, such as for copyright or, in certain cases, patent infringement. If you learn about a Kickstarter campaign that may be infringing these rights, you should consult with an experienced intellectual property attorney in your area.

If You Believe a Kickstarter Creator Has Violated Your Rights, Consult a Lawyer

Kickstarter provides a platform for bringing people with creative ideas together with those who may be able to help get those ideas off the ground. An unfortunate truth is that some of the "creators" on Kickstarter are only there to take your money. Even well-intentioned developers may find that they lack the experience and expertise to bring a product to market and cannot provide you with the rewards they promised you.

If you have lost money due to a failed or fraudulent Kickstarter campaign, you should consult with a lawyer in your area to see whether bringing a lawsuit in your circumstances, or even a class action, makes sense in light of your legal issues. Remember states have different statutes of limitations, so you should act promptly to make sure you are not prohibited by law from filing suit.

You could also get help from the government by filing a complaint with the Federal Trade Commission (FTC). You could also contact your state attorney general. The attorney general's office is responsible for protecting consumers from scams under the state's consumer protection laws.

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