The Federal Trade Commission (FTC) recently filed a lawsuit against Erik Chevalier, who had initiated a crowdfunding campaign to raise money for the development of a board game. This was the first case in which the FTC has alleged false or deceptive advertising involving crowdfunding. The case quickly settled.

The FTC’s complaint asserted that Chevalier collected over $122,000, promising consumer/investors they would receive rewards, including a copy of the game. After several months, Chevalier announced he was abandoning the project, but apparently did not issue refunds to most consumer/investors, as the FTC received numerous complaints about the project.

As part of the settlement, Chevalier is prohibited from: (a) making misrepresentations about any crowdfunding campaign and (b) benefiting from any of the personal information obtained from consumer/investors. An $111,793 judgment is also part of the order, however is being suspended due to the defendant’s inability to pay.

With this first case behind it, the FTC will likely pursue future enforcement actions involving crowdfunding. Access the FTC’s press release here. Contact us at Ossian Law P.C. regarding any information technology law question.