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June 13, 2012

2

Exploiting Kickstarter’s success metrics for (fun and) profit.

by e1ven

Edit – Please don’t do this!

If you do, you risk having the project you are supporting banned, which isn’t what anyone wants
I wrote this article as a mental exercise in exploring the Street-Performer-Protocol Trust model, PLEASE do not try this.



Because I don’t believe in Whitewashing history, I’ve left the article intact below, but once more, I’d urge you not to do anything like this…


Original Article Follows


Screen Shot 2012 06 13 at 2 41 41 PM

With the resurrection of so many great Adventure Games via Kickstarter, I’ve ended up following the platform somewhat closely, and seen a number of projects come close to failing.

Kickstarter Overview

The basic premise behind Kickstarter is that people who are creating a project can use it to raise money from the general public.
Kickstarter manages this process by allowing people to “Pledge” an amount toward a project. If the project raises enough in Pledges to meet it’s fundraising goal, Kickstarter charges everyone’s credit cards, and gives the money to the creator.

If the amount pledged is even $1 shy of the goal, however, no money is deducted from people’s credit cards, and the project creator makes nothing at all.

Old Internet wonks might recognize this as similar to the Street Performer Protocol.

Where it differs from the SPP, however, is that the money is not in escrow after it’s pledged.

The money is only drawn from a user’s credit card after the project is successfully funded.

This opens up a rather substantial exploit, in that users are able to pledge amounts they have no ability to pay.

From Kickstart’s FAQ-

What happens if a backer’s credit card is declined?

If a credit card is declined, an email is sent to the backer every 48 hours with a link to fix the
issue. The backer has seven days to correct the problem. If they do not correct the payment during
that seven day period, they are dropped as backers from the project and are no longer eligible to
receive rewards. You can view the status of all your backers on your Backer Report.

Essentially a project is declared “Successful”, and Credit Cards are charged, when Pledges reach the goal, regardless of if the pledges can ever be paid.
For many project Creators, receiving slightly less than their target goal is better than having the project fail entirely.

Example:

Let’s say that you’re watching a project that’s trying to raise $1000, and it’s going to buy a new swingset for the park down the street.
Over the last few weeks, the project has only managed to raise $750, and you can see project is going to expire later today.
Since it hasn’t reached the goal of $1000, the project will fail, and the park will remain swingless.

But Wait! You know that they sell other swings in the world. There are some that sell for only $700, rather than $1000..
Sure, it might not be as nice as the one originally pitched, but it’ll do.

Being the dastardly do-eviler that you are, you create a fake account on Kickstarter, and link it with a fake Amazon Payments account.
NOTE-

As on 2011, Amazon REQUIRES you to give it a SSN to sign up for an account.
This is bypassable, however. If you create an account, but close the browser window when it asks for a SSN, then re-log back in using the “Confirm by email” link, you can proceed without giving it a SSN.

Regardless, if this hole is fixed, you could use a normal Amazon Payment account, just ensure it’s empty.

You remove all credit cards from your Amazon Payments account, save one lonely $10 Prepaid card.


Then, you pledge the amount necessary to save the project.

SwingSet

Since the amount of pledges is now above the goal, the project is successful! Everyone’s card is charged!

Amazon tries to charge your card, but it fails, since it was only a pre-paid tiny card.

Hi there,

Amazon was unable to charge your credit card for your $300.00 pledge to Super-Swingset. This is usually caused by a recently expired, canceled, or maxed-out credit card. No need to worry — it’s a simple fix.

Just click the link below to complete your pledge with a different credit card:
Update your Pledge.

The rest of the pledges go through, however.

The money is charged, and the project is successful!

Congratulations!

Thanks to you and 136 other backers, Super-Swingset has been successfully funded. Amazon will now charge your credit card.

You saved the park!

On the other hand, you defrauded Kickstarter, Amazon, and all the other pledgers, who won’t get their money back now.

What can Kickstarter do?

It seems like the easiest way to avoid this problem would be to either do a Credit Card authorization hold when they first pledge, or to withdraw the money at pledge-time, and keep it in escrow.

With either of these strategies, however, Kickstarter is inconviencing their users, who lose access to the money during the month, or may need to pay additional interest due to KS withdrawing the money early.

It seems a pretty thorny problem, and I hope that KS is able to come up with a decent solution.
I’ve never used this tactic to save a project, but I can’t say I haven’t been very tempted.

Thoughts welcome.

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2 Comments Post a comment
  1. Jun 21 2012

    While this might work once, if one person completes this tactic, I see at least three areas of potential project & system risk introduced by the introduction and *repeated use* of this tactic. A) It increases an incentive to round down on project costs, which might tend towards project with less functionality. Basically, it rewards bad estimating. B) As knowledge of the prevalence of this tactic spreads, it must tend to reduce trust in the community as honest funders of the project. (Since the community will now include acknowledged renegers, i.e those whose behaviors are less of trust) This will tend to reduce trust in the system, since it is known to have — allow without negative consequences — untrustworthy elements. And 3) I believe it is un-universalizable (cannot be universalized without contradiction). Participants (or, in game theory, players) cannot wish that every participant or player operated in the same way. It would take a lot of space to explain clearly how, but I feel that this tactic violates Kant’s categorical and hypothetical imperatives, which are still widely held to bear significance logical force for deciding the ethical valence of a choice. http://plato.stanford.edu/entries/kant-moral/#CatHypImp

    Reply
    • e1ven
      Oct 24 2012

      I can certainly see your point – IndieGoGo charges cards upfront, potentially to avoid this scenerio.

      Right now, Kickstarter’s model already has a built-in incentive to “Aim Low”- By asking for less money, you can help ensure “success” in that you get *something*.
      It’d be better for a project to ask for $100, to try to make a $100,000 project, if they’re committed to proceeding regardless.

      While I don’t condone that behavior, doing so ensures the KS component “succeeds”, which means that the money will be delivered.
      Since a project is able to over-fund (you can raise more than the goal), you can go for a “Stretch Goal” of 100K, which is your real target fundraising objective.

      I’m not sure what the right solution is, but there’s still innovation to find in this space.

      Reply

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