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The anatomy of a Kickstarter scam, starring Peachy Printer

If as much effort went into actually building this product compared to scamming investors and covering their asses, the Peachy Printer founders might have actually come up with something worthwhile.

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Bad apples spoil the bunch

I always wondered what BS smells like and now I know. The Kickstarter Peachy Printer scam is so unbelievably crooked that I can’t help but wonder if these guys had just put the same amount of effort into actually following through on their promises that they did on siphoning money from investors, something worthwhile may have actually been produced.

This is going to be a wild read, hang on to your butts.

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The short version

Two young entrepreneurs come up with an idea to create a desktop 3D printer that would cost consumers only $100. Dreamy, right?

Impressed Kickstarter investors ponied up $600,000 (Canadian). For reasons that completely escape me, the inventor and his partner do this without having set up a business banking account, so all the money goes into a private checking account where one of the partners’ proceeds to spend most of the funds on a new house!

Said 3D printer never gets made, no one gets arrested, and the whole scam is covered up for more than two years before it goes public.

Note from the Editor: This all feels like an elaborate hoax, but is being reported by even the most credible sources (like BBC), but we’re still holding our breath – filmed confessions that sound like a high school play? We’ll see.

A template for success

Kickstarter has set up a process where entrepreneurs have the potential to find investors so funds can be raised and dreams can be realized. The track record for this is pretty good because Kickstarter seems to be stronger than ever and is extremely vigilant about protecting their community.

Further, Kickstarter tells you (in fine print) that respective products may never see the light of day. Which is why money pledged is considered a donation.

But I digress. The Peachy Printer debacle is a prime example of why the government is getting involved and trying to regulate crowdfunding sites in order to make those receiving funds legally responsible.

The fine print

Always read the fine print. This is from the Kickstarter Website:

“Kickstarter does not guarantee projects or investigate a creator’s ability to complete their project. On Kickstarter, backers ultimately decide the validity and worthiness of a project by whether they decide to fund it.”

What is a creator obligated to do once their project is funded? (Notice it says fundamental and not LEGAL obligation). I’m glad you asked.

“When a project is successfully funded, the creator is responsible for completing the project and fulfilling each reward. Their fundamental obligation to backers is to finish all the work that was promised. Once a creator has done so, they’ve fulfilled their obligation to their backers. At the same time, backers must understand that Kickstarter is not a store. When you back a project, you’re helping to create something new, not ordering something that already exists. There’s a chance something could happen that prevents the creator from being able to finish the project as promised.

If a creator is absolutely unable to complete the project and fulfill rewards, they must make every reasonable effort to find another way of bringing the project to a satisfying conclusion for their backers.”

That is what is SUPPOSED to happen. It doesn’t mean that is what WILL happen.

Integrity is SO overrated

You can see Kickstarter has tried to insert some inherent sense of doing the right thing. All they do is provide a template. They get their percentage and sleep well at night because investors more or less know up front what they are getting into.

As bad as the Peachy Printer project is/was, it’s nothing compared to the recent Zano mini-drone initiative that scorched investors for several million dollars.

In both cases, the project developers apologized and tried to smooth things over by presenting professionally made graphics that explain how the money was spent. I noticed in both cases that no one made the effort to include a pie chart showing expenditures for a new house or a private island in the tropics, but I guess that’s neither here nor there.

Like money in the bank

In the bigger scheme of things how this ultimately ends is anyone’s guess. Regarding Peachy Printer, so far no printers have been made, most likely for the simple reason that one of the partners in the project took the money and built a house with it. Investors are likely pissed off because they got burned.

Will this give investors more pause before investing in crowdfunding sites? Maybe, maybe not.

Lino Rivera tells us, “My overall opinion on crowdfunding is a positive one, but there are no doubt pitfalls at every corner. I’ve had customers come from that space who were wildly successful out of the gate only to lose steam and ‘realign themselves’ a year after. I’ve backed a few projects myself, now that I think about it though, I haven’t received anything yet from those campaigns.”

“The last one I backed was actually from an established company who said crowdfunding sped up the time to market,” Rivera notes. “Really though, I believe it had more to do with market validation, which I think is one of crowdfundings greatest strengths. Before investing in huge amounts of capital, you get to see if it is even something the market wants.”

Will one bad apple spoil the bunch? Probably not, because as Rivera notes, there are other reasons for crowdfunding than the actual dollars. And Peachy Printer is hardly the first to victimize the crowdfunding space, so stay tuned.


All links he mentions are on this site.

#KickstarterScam

Nearly three decades living and working all over the world as a radio and television broadcast journalist in the United States Air Force, Staff Writer, Gary Picariello is now retired from the military and is focused on his writing career.

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Big retailers are opting for refunds instead of returns

(BUSINESS NEWS) Due to increased shipping costs, big companies like Amazon and Walmart are opting to give out a refund rather than accepting small items returned.

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Package delivery people holding deliveries. Refund instead of returns are common now.

The holidays are over, and now some people are ready to return an item that didn’t quite work out or wasn’t on their Christmas list. Whatever the reason, some retailers are giving customers a refund and letting them keep the product, too.

When Vancouver, Washington resident, Lorie Anderson, tried returning makeup from Target and batteries from Walmart she had purchased online, the retailers told her she could keep or donate the products. “They were inexpensive, and it wouldn’t make much financial sense to return them by mail,” said Ms. Anderson, 38. “It’s a hassle to pack up the box and drop it at the post office or UPS. This was one less thing I had to worry about.”

Amazon.com Inc., Walmart Inc., and other companies are changing the way they handle returns this year, according to a report by The Wall Street Journal (WSJ). The companies are using artificial intelligence (AI) to weigh the costs of processing physical returns versus just issuing a refund and having customers keep the item.

For instance, if it costs more to ship an inexpensive or larger item than it is to refund the purchase price, companies are giving customers a refund and telling them to keep the products also. Due to an increase in online shopping, it makes sense for companies to change how they manage returns.

Locus Robotics chief executive Rick Faulk told the Journal that the biggest expense when it comes to processing returns is shipping costs. “Returning to a store is significantly cheaper because the retailer can save the freight, which can run 15% to 20% of the cost,” Faulk said.

But, returning products to physical stores isn’t something a lot of people are wanting to do. According to the return processing firm Narvar, online returns increased by 70% in 2020. With people still hunkered down because of the pandemic, changing how to handle returns is a good thing for companies to consider to reduce shipping expenses.

While it might be nice to keep the makeup or batteries for free, don’t expect to return that new PS5 and get to keep it for free, too. According to WSJ, a Walmart spokesperson said the company lets someone keep a refunded item only if the company doesn’t plan on reselling it. And, besides taking the economic costs into consideration, the companies look at the customer’s purchase history as well.

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Google workers have formed company’s first labor union

(BUSINESS NEWS) A number of Google employees have agreed to commit 1% of their salary to labor union dues to support employee activism and fight workplace discrimination.

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Google complex with human sized chessboard, where a labor union has been formed.

On Monday morning, Google workers announced that they have formed a union with the support of the Communications Workers of America (CWA), the largest communications and media labor union in the U.S.

The new union, Alphabet Workers Union (AWU) was organized in secret for about a year and formed to support employee activism, and fight discrimination and unfairness in the workplace.

“From fighting the ‘real names’ policy, to opposing Project Maven, to protesting the egregious, multi-million dollar payouts that have been given to executives who’ve committed sexual harassment, we’ve seen first-hand that Alphabet responds when we act collectively. Our new union provides a sustainable structure to ensure that our shared values as Alphabet employees are respected even after the headlines fade,” stated Program Manager Nicki Anselmo in a press release.

AWU is the first union in the company’s history, and it is open to all employees and contractors at any Alphabet company in the United States and Canada. The cost of membership is 1% of an employee’s total compensation, and the money collected will be used to fund the union organization.

In a response to the announcement, Google’s Director of People Operations, Kara Silverstein, said, “We’ve always worked hard to create a supportive and rewarding workplace for our workforce. Of course, our employees have protected labor rights that we support. But as we’ve always done, we’ll continue engaging directly with all our employees.”

Unlike other labor unions, the AWU is considered a “Minority Union”. This means it doesn’t need formal recognition from the National Labor Relations Board. However, it also means Alphabet can’t be forced to meet the union’s demands until a majority of employees support it.

So far, the number of members in the union represents a very small portion of Google’s workforce, but it’s growing every day. When the news of the union was first announced on Monday, roughly 230 employees made up the union. Less than 24 hours later, there were 400 employees in the union, and now that number jumped to over 500 employees.

Unions among Silicon Valley’s tech giants are rare, but labor activism is slowly picking up speed, especially with more workers speaking out and organizing.

“The Alphabet Workers Union will be the structure that ensures Google workers can actively push for real changes at the company, from the kinds of contracts Google accepts to employee classification to wage and compensation issues. All issues relevant to Google as a workplace will be the purview of the union and its members,” stated the AWU in a press release.

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Ticketmaster caught red-handed hacking, hit with major fines

(BUSINESS NEWS) Ticketmaster has agreed to pay $10 million to resolve criminal charges after hacking into a competitor’s network specifically to sabotage.

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Person open on hacking computer screen, typing on keyboard.

Live Nation’s Ticketmaster agreed to pay $10 million to resolve criminal charges after admitting to hacking into a competitor’s network and scheming to “choke off” the ticket seller company and “cut [victim company] off at the knees”.

Ticketmaster admitted hiring former employee, Stephen Mead, from startup rival CrowdSurge (which merged with Songkick) in 2013. In 2012, Mead signed a separation agreement to keep his previous company’s information confidential. When he joined Live Nation, Mead provided that confidential information to the former head of the Artist Services division, Zeeshan Zaidi, and other Ticketmaster employees. The hacking information shared with the company included usernames, passwords, data analytics, and other insider secrets.

“When employees walk out of one company and into another, it’s illegal for them to take proprietary information with them. Ticketmaster used stolen information to gain an advantage over its competition, and then promoted the employees who broke the law. This investigation is a perfect example of why these laws exist – to protect consumers from being cheated in what should be a fair market place,” said FBI Assistant Director-in-Charge Sweeney.

In January 2014, Mead gave a Ticketmaster executive multiple sets of login information to Toolboxes, the competitor’s password-protected app that provides real-time data about tickets sold through the company. Later, at an Artists Services Summit, Mead logged into a Toolbox and demonstrated the product to Live Nation and Ticketmaster employees. Information collected from the Toolboxes were used to “benchmark” Ticketmaster’s offerings against the competitor.

“Ticketmaster employees repeatedly – and illegally – accessed a competitor’s computers without authorization using stolen passwords to unlawfully collect business intelligence,” said Acting U.S. Attorney DuCharme in a statement. “Further, Ticketmaster’s employees brazenly held a division-wide ‘summit’ at which the stolen passwords were used to access the victim company’s computers, as if that were an appropriate business tactic.”

The hacking violations were first reported in 2017 when CrowdSurge sued Live Nation for antitrust violations. A spokesperson told The Verge, “Ticketmaster terminated both Zaidi and Mead in 2017, after their conduct came to light. Their actions violated our corporate policies and were inconsistent with our values. We are pleased that this matter is now resolved.”

To resolve the case, Ticketmaster will pay a $10 million criminal penalty, create a compliance and ethics program, and report to the United States Attorney’s Office annually during a three-year term. If the agreement is breached, Ticketmaster will be charged with: “One count of conspiracy to commit computer intrusions, one count of computer intrusion for commercial advantage, one count of computer intrusion in furtherance of fraud, one count of wire fraud conspiracy and one count of wire fraud.”

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