Montreal Kickstarter Project Shutters After Fraud Allegations

luci

In yet another example of crowdfunding projects failing to deliver what they say they will provide backers, apparently a case of Kickstarter fraud has surfaced in La Belle Province.

The Wall Street Journal reports that the “Luci”, a device that “induces lucid dreaming”- was pulled off of the site last night after several backers on the comment section apparently piped up over “red flags”. These were a lack of information on the Montreal-based company, GPX Technologies, and how pictures and videos of the device didn’t satisfy backers probes.

From taking a look at the Kickstarter page, there are tons of pictures, but the video doesn’t show the device in real life action - the Wall Street Journal called it “modified images of the components of the Luci device, and a lack of video of the device in action.” It begs the question why one would contribute money in the first place, and only after criticize its transparency.

Here’s the video:

I wouldn’t consider myself an “opponent” to crowdfunding sites like Kickstarter or Indiegogo, but I’ve tried to highlight realities surrounding these types of platforms, mainly the potential for people being duped into losing their money.

“The story of Luci both highlights the vulnerability of crowdfunding sites like Kickstarter, where virtually anyone can raise money, and the power of online crowds as a regulatory force,” wrote reporter Evelyn Rusli.

Following the product being pulled off the site, $363,000 Canadian dollars will be returned to 2,569 backers. It was on the site as early as November 1, when $175 would purportedly get one a Luci.

The pledges rose to as much as $400,000, but it lost over $38,000 last night before being “shelved”. Then, wrote Rusli, “in the comments page, GPX’s Kickstarter account sternly defended its status as a registered business and said its photos were legitimate.” The account then accused one backer under the handle ‘Manoko,’ of harassing Luci founder Wayne Kendall’s wife on Facebook.

The episode points to how such projects get on these sites and the push and pull between the site asking for people’s money, but also warning them to spend wisely. Kickstarter verifies the identity, address, bank account, phone number and email for the project creators. From speaking to some submitters who have had a tough time getting projects on Kickstarter, the site seems to hold a general rule that anything on it must be “creative” in nature, which inevitably ends up favouring hardware. Thus, social networks and causes are not accepted.

One Ottawa-based startup told me how they had to re-submit their idea four times before it was accepted on the site, despite several seemingly contradictory remarks from the site. While it only accepts “creative” projects, there are several examples of the site accepting social networks, or even causes (such as when the New York City Opera tried to crowdfunding money for their upcoming season).

On top of what can be seen as a platform that loosely enforcing rules on some startups, but not on others, it seems obvious that the site itself can be duped into allowing fraudulent people submitting fake projects and then taking people’s money.

The site does try to warn people, urging users to carefully review a project’s materials before pledging money. Users can also alert Kickstarter if they suspect a project is inappropriate or fraudulent.

“So far, Kickstarter has hosted more than 100,000 projects, and of these, less than a dozen have been shut down because of fraud concerns, according to the company,” wrote Rusli.

Everything revolving around the Luci is still up in the air, and no one has been proved guilty, but cases like these point out some of the risks of such modern funding mechanisms. There’s no doubt that amazing products have come to market through these platforms, but people need to be aware of examples like Luci.

Joseph Czikk

Joseph Czikk

Joseph Czikk is Managing Editor at Betakit. Prior to Betakit Joseph wrote for the National Post, Montreal Gazette, Vancouver Sun, Regina Leader Post, Techvibes and BC Business Online. Joseph often goes crazy on twitter during NHL and NFL games.

  • chumbaz

    Looking at the project, looks like it was cancelled by the creator not pulled off the site.

    • SwissTech

      It is illogical to assume the creator rejected 400,000 dollars, screwed over 2500 investors and destroyed his reputation just because the investors demanded to see a pic or short video of the prototype.

      Basically GXP was about to receive 400,000 dollars based on a few photoshop mockups thus the reason why the campaign ended early (Saving 2500 investors from the greatest robbery in crowd sourcing history).

      According to kickstarter guidelines it is a core requirement to have a working prototype before asking for money to put a product into mass production thus kickstarter clearly pulled the plug since so many people complained. If kickstarter would not have pulled the plug it would have DESTROYED their reputation! Cheers

  • dyl

    i was really looking forward to this, when you think about how such a device would change society if a good number of people would start using it, the possibilities are without boundaries. I hope another company starts a project with the same goal, i know somewhere where people are eager to get something of the kind and are willing to give money for it, kickstarter, why not try again?