Attorney

Man Invests in Kickstarter Campaign, Wonders Where Money Went

Ron Phelps is a music buff. And when he’s not listening to it from his home sound system speakers, he's listening to it from earbuds.

So Phelps was intrigued by a headset prototype that melds the two systems. It's called Sound Band.

“The idea was the Sound Band would sit over your ears and have a controller in the back, and it would transmit the sound to you through the outside of your ears,” Phelps said.

Phelps found Sound Band on the crowdfunding site Kickstarter. Sound Band’s creator was raising money to bring the product to market.

So Phelps pitched in $135. In return for his investment, he was promised one Sound Band headset - to be delivered by the end of the year.

The problem?

“This is three years ago,” said Phelps.

The Sound Band Kickstarter campaign secured nearly 4,000 backers and has raised more than $500,000. But Phelps has never received his headset. And he wonders where all the money went.

“The money for Sound Band, we have no way of accounting for it because nobody will tell us anything,” Phelps said.

Other backers are frustrated too. They’ve posted comments on Sound Band’s Kickstarter page.

“Can I get a refund please???” one backer asks.

“This is quite the long con,” wrote another.

While Sound Band’s creator used to post regular updates on the Kickstarter page, those messages are now sporadic. The most recent update was last month. The one before that was last December.

“One would think they’d have to have a little more responsibility than 'We’ll take your money and you’re on your own,'" Phelps said.

So Phelps turned to Kickstarter to step in. But he was disappointed once again. Its terms of use say: “Kickstarter does not guarantee projects or investigate a creator’s ability to complete their project.”

“There’s no oversight,” Phelps said.

Kickstarter takes its cut from the deal - 5% of what Sound Band raised, or $27,000 - and after that, it doesn’t do much else. Kickstarter won’t ask Sound Band where the money went. It won’t ask about the product. And it also won’t help disappointed backers secure refunds.

Attorney Hank Burgoyne points out that Kickstarter is just the middle man.

“Kickstarter’s agreement is pretty clear that their obligation is to do nothing,” said Phelps.

Burgoyne says Phelps has two options: file a complaint with the FTC, or file an individual civil lawsuit against the creator of Sound Band.

Either way, Burgoyne says backers will likely have a tough time recovering their money. He understands the backers’ frustration but suspects this was simply a big idea gone bad.

“It’s not like there’s always this horrible person on the other end who started out saying, 'I’m going to bilk all these people,'" Burgoyne said. “It’s usually someone whose ambitions got ahead of their capacity.”

NBC Bay Area wanted to talk with the creator of Sound Band to find out what happened. It wasn’t easy tracking him down. But we finally reached him at a Michigan phone number.

He confirmed he was the CEO of the company creating Sound Band but said the people who were in charge of the project were “inexperienced.” He said they’re now long gone, no longer affiliated with Sound Band.

As for the money raised, he said: “Any claims I took the money personally are absolutely false.” In fact, he says the $500,000 raised on the Kickstarter campaign is just one-third of what it has cost him trying to get Sound Band to market. He insists he will deliver a product, but he said: “I don’t have a deadline.”

Phelps says it’s already too late - technology has changed. And he’s ready for something else.

“Even if I got my Sound Band now, there’s already other stuff out there doing the same thing in a better form for a cheaper price,” he said.

Kickstarter declined our request for an on-camera interview for this story. But it says more than 110,000 projects have been funded on its site, and it says a vast majority of creators complete their projects as promised.

The company pointed to a survey conducted by the University of Pennsylvania last year that found about 9 percent of Kickstarter projects fail to deliver.

Before someone donates money to a campaign, Kickstarter suggests they learn as much as they can about the creator of the project, including if they have a history of completing projects. Also, scrutinize if they have a clear path for how they’ll compete the project you’re interested in supporting.

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