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12/19/2014 Dawn Sole turned to the Internet to fund her business. Then the Internet turned on her. - South Florida Busines...
12/19/2014 Dawn Sole turned to the Internet to fund her business. Then the Internet turned on her. - South Florida Busines...
12/19/2014 Dawn Sole turned to the Internet to fund her business. Then the Internet turned on her. - South Florida Busines...
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South fl bus journal cover story

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South Florida Business Journal Cover story on the Kickstarter scam that happened to me.

READ this before you launch your campaign.

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South fl bus journal cover story

  1. 1. 12/19/2014 Dawn Sole turned to the Internet to fund her business. Then the Internet turned on her. - South Florida Business Journal http://www.bizjournals.com/southflorida/print-edition/2014/12/19/dawn-sole-turned-to-the-internet-to-fund-her.html?s=print 1/3 From  the  South  Florida  Business  Journal :http://www.bizjournals.com/southflorida/print-­edition/2014/12/19/dawn-­sole-­ turned-­to-­the-­internet-­to-­fund-­her.html Dawn  Sole  turned  to  the  Internet  to  fund her  business.  Then  the  Internet  turned  on her. SUBSCRIBER  CONTENT:  Dec  19,  2014,  6:00am  EST  Updated:  Dec  19,  2014,  9:11am  EST Celia  Ampel Reporter-­  South  Florida  Business  Journal Email    |    Twitter    |    Facebook M  iami  entrepreneur  Dawn  Sole  figured  much  of  her  struggle  was  over  once  she  started  an Indiegogo  crowdfunding  campaign  for  her  invention. She  had  spent  four  years  working  on  Pluck  N'  File,  a  "Swiss  Army  knife  of  beauty  tools"  that includes  a  tweezer,  an  eyebrow  comb,  a  nail  file  and  a  buffer. Sole  had  a  patent,  a  trademark,  a  prototype  and  an  agreement  with  a  manufacturer.  All  she needed  to  do  was  raise  about  $25,000  to  fund  the  first  batch  of  products. It  was  such  a  solid  business  plan  that  someone  stole  it. When  Sole  Googled  her  company's  name  earlier  this  month,  she  found  a  copycat  Kickstarter page  for  her  product.  The  page,  which  she  hadn't  started,  included  her  company's  name, photos  and  her  product  descriptions,  copied  word-­for-­word. The  campaign  had  raised  about  17,000  British  pounds  —  or  $27,000.  Her  own  campaign,  had raised  less. "These  guys  were  trying  to  raise  the  money,  get  the  funds,  and  they  weren't  going  to  be  able to  fulfill  the  orders,  and  they  were  gonna  run,"  she  said. Sole  and  her  lawyer  sent  a  cease-­and-­desist  letter  to  Kickstarter.  The  company  stamped  the word  "suspended"  across  the  page,  ending  the  fundraising  campaign  before  money  was collected  —  but  Sole  worries  that  the  page  will  continue  to  cause  confusion  and  damage  her business.
  2. 2. 12/19/2014 Dawn Sole turned to the Internet to fund her business. Then the Internet turned on her. - South Florida Business Journal http://www.bizjournals.com/southflorida/print-edition/2014/12/19/dawn-sole-turned-to-the-internet-to-fund-her.html?s=print 2/3 "When  people  see  it  on  Kickstarter,  they're  going  to  see  Pluck  N'  File  and  they're  going  to assume  that  it's  me,"  she  said.  "They're  going  to  think,  'OK,  why  was  it  suspended?  What  did Pluck  N'  File  do  wrong?'" Crowdfunding  is  a  relatively  new  phenomenon,  allowing  entrepreneurs,  artists  and  others  to raise  piles  of  money  through  online  donations.  More  than  $5.1  billion  was  raised  through crowdfunding  in  2013,  up  from  just  $2.7  billion  in  2012,  according  to  research  firm  Massolution. Federal  regulators  are  debating  rules  for  equity  crowdfunding,  which  was  made  legal  through the  2012  JOBS  Act,  working  to  close  loopholes  that  leave  consumers  vulnerable  to  stock  scams. But  non-­equity  crowdfunding  is  still  something  of  a  Wild  West,  with  crowdfunding  platforms' policies  abdicating  responsibility  for  users  who  defraud  consumers  and  small  business  owners like  Sole. Kickstarter,  for  instance,  lets  users  know  that  it  can't  be  held  accountable  for  projects  that  raise funds  on  its  site. And  successful  campaigns  can  range  from  the  brilliant  to  the  ridiculous.  For  instance,  users contributed  $10  million  for  the  Pebble  smartwatch,  but  also  gave  $55,000  to  a  man  named "Zack  Danger  Brown"  who  said  he  was  using  the  money  just  to  make  potato  salad. "Kickstarter  does  not  guarantee  projects  or  investigate  a  creator's  ability  to  complete  their project,"  the  company's  website  states.  "On  Kickstarter,  backers  ultimately  decide  the  validity and  worthiness  of  a  project  by  whether  they  decide  to  fund  it." The  crowdfunding  site  does  try  to  prevent  copyright  infringement  and  other  scams,  Kickstarter spokesman  David  Gallagher  said  in  an  email. "If  we  find  that  projects  are  in  violation  of  our  rules  —  for  example,  if  the  creator  is misrepresenting  facts  about  themselves  or  their  project  —  we  will  take  action,  which  may include  suspending  the  project,"  Gallagher  wrote.  "Suspensions  are  permanent  and  not reversible." But  when  asked  how  many  complaints  Kickstarter  receives  each  year,  or  whether  the  company ever  removes  pages  from  its  website  after  suspending  them,  Gallagher  declined  to  answer. "Unfortunately,  I  can't  provide  more  information  about  our  policies  in  this  area,"  he  wrote. Sole  is  consulting  with  Miami  attorney  Loren  Donald  Pearson  to  see  what  legal  action  she  could take.  If  she  files  suit,  she  will  be  one  of  the  first. Washington  state's  attorney  general  filed  the  first  consumer  protection  lawsuit  involving crowdfunding  in  May,  suing  a  businessman  who  failed  to  deliver  on  a  Kickstarter  campaign  for  a card  game. Pearson,  an  intellectual  property  lawyer  with  South  Florida  business  law  firm  Assouline  & Berlowe,  said  Kickstarter  could  well  be  protected  from  a  lawsuit.
  3. 3. 12/19/2014 Dawn Sole turned to the Internet to fund her business. Then the Internet turned on her. - South Florida Business Journal http://www.bizjournals.com/southflorida/print-edition/2014/12/19/dawn-sole-turned-to-the-internet-to-fund-her.html?s=print 3/3 "There  are  safe  harbors  for  companies  like  this  who  are  posting  submissions  by  third  parties," he  said.  "We  have  to  look  to  make  sure  they've  complied  with  requirements  under  the  Digital Millennium  Copyright  Act." Pearson  said  the  person  behind  the  fake  Kickstarter  campaign  could  certainly  be  liable  for patent  infringement,  trademark  infringement  and  unfair  competition.  The  trouble  is,  he  may never  know  who  the  trickster  is. Kickstarter  almost  definitely  has  bank  account  information  and  an  email  address  for  the campaign's  creator,  but  Pearson  hasn't  been  able  to  get  that  information  for  his  client. "So  far,  [Kickstarter  has]  been  kind  of  hiding  behind  their  privacy  policy  and  not  telling  us  about the  person  who  posted  the  project,"  he  said.  "If  that  continues,  we  may  have  to  subpoena  that information  or  even  file  suit  against  Kickstarter  to  get  that  information." Sole's  Indiegogo  campaign  closes  Jan.  2.  She  wishes  that  Kickstarter  would  close  down  the  fake campaign  or  at  least  redirect  donors  to  her  real  page  on  Indiegogo  —  but  until  then  the  Pluck N'  File  creator  will  fight  the  company  tooth  and  nail. "I  know  this  has  definitely  happened  to  other  people  because  I  could  see  the  loopholes,"  she said.  "If  I  could  make  a  difference  with  my  story,  I  have  no  problem  being  the  example  of  what could  happen  if  you're  not  careful  and  you're  not  doing  your  homework." Celia  Ampel  covers  technology,  startups,  venture  capital  and  angel  investment.  Stay on  top  of  the  latest  venture  news  with  our  free  daily  newsletter.  Click  here  to subscribe.

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