CROWDFUNDING What's to Prevent Someone From Ripping Off Your Crowdfunding Campaign? Not Much. Image credit: Dawn Sole Catherine Clifford Entrepreneur Staff Frequently Covers Crowdfunding, The Sharing Economy And Social Entrepreneurship. MAY 04, 2015 Dawn Sole was hunting through her purse in a grocery store parking lot one day in August 2010 when she came up with the idea for the Pluck N’ File. She had chipped a nail while carrying too many groceries and needed to smooth out the jagged edge. First, she had
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5/4/2015 What's to Prevent Someone From Ripping Off Your Crowdfunding Campaign? Not Much.
http://www.entrepreneur.com/article/245656 1/9
CROWDFUNDING
What's to Prevent
Someone From Ripping
Off Your Crowdfunding
Campaign? Not Much.
Image credit: Dawn Sole
Catherine Clifford
Entrepreneur StaffFrequently Covers Crowdfunding, The Sharing Economy And SocialEntrepreneurship.
MAY 04, 2015
Dawn Sole was hunting through her purse in a grocery
store parking lot one day in August 2010 when she
came up with the idea for the Pluck N’ File. She had
chipped a nail while carrying too many groceries and
needed to smooth out the jagged edge. First, she had
5/4/2015 What's to Prevent Someone From Ripping Off Your Crowdfunding Campaign? Not Much.
http://www.entrepreneur.com/article/245656 2/9
to hunt around her purse for her nail file. Then, she dug
around for her nail buffer. Finally, taking advantage of
good lighting, she decided to clean up her eyebrows
and went back into her purse for the third time looking
for tweezers. It was then that she thought, why couldn’t
these grooming tools be rolled into one, female Swiss
Army knife style? She drove directly to CVS, bought a
bunch of parts, and set out to invent what she had just
dreamed up.
After months of tinkering and countless manufacturing
beta tests with companies based in China, Sole, who
lives in Miami Beach, Fla., came up with a prototype she
was pleased with. She decided to raise money via
crowdfunding for her first real production run, turning to
the most popular brand-name platform, Kickstarter.
That was in September of 2013 and at that point,
“personal care products,” including the Pluck N’ File,
were not allowed to be featured on the crowdfunding
platform. Since then, Kickstarter has loosened its rules,
expanding its range of campaign categories.
5/4/2015 What's to Prevent Someone From Ripping Off Your Crowdfunding Campaign? Not Much.
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Image credit: Dawn Sole
Related: Food-Tech Startup Dinner Lab Is
Crowdfunding a Cool $2 Million -- From Its Customers
Having been rebuffed by Kickstarter, Sole launched her
campaign on rival crowdfunding platform Indiegogo in
November 2014, setting a goal of $25,000. She poured
everything into the campaign, having left her six-figure
corporate job in October 2012 to focus full time on Pluck
N’ File.
“I took literally every penny that I had from my 401(k). I
have been bootstrapping everything,” she says. “That’s
why I did the crowdfunding campaign. I have basically
tapped out my resources.”
Then, a harbinger of impending confusion: Sole began
to get phone calls and emails from people looking to
donate to her campaign, but weren’t sure which
5/4/2015 What's to Prevent Someone From Ripping Off Your Crowdfunding Campaign? Not Much.
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campaign they should donate to.
On Dec. 5, Sole Googled her company name and was
shocked to find her same Pluck N’ File Indiegogo
campaign running on Kickstarter. Someone had ripped
off the entire campaign, nearly verbatim, and was
raising money doing it.
Related: Déjà Vu 2012: A Zombie-Frankenstein JOBS
Act 2.0 Is in the Works
Immediately, Sole called her attorney and together they
alerted Kickstarter of the fraudulent campaign.
Kickstarter suspended the campaign. Currently, the
webpage where it existed says that the project “is the
subject of an intellectual property dispute and is
currently unavailable.”
Image credit: Dawn Sole
5/4/2015 What's to Prevent Someone From Ripping Off Your Crowdfunding Campaign? Not Much.
http://www.entrepreneur.com/article/245656 5/9
For campaigns that are suspended, Kickstarter does not
allow money to change hands. Ergo, whoever copied
and pasted Sole’s crowdfunding campaign did not end
up making any money. What Sole argues, however, is
that her reputation as an inventor and entrepreneur has
been irrevocably damaged. Potential investors who
might have searched for her name online to contribute
to her crowdfunding campaign could have found the
wrong campaign, donated, and received no further
correspondence or product updates.
The campaign on Kickstarter was created by someone
by the name of Bilquees Ottun, whose contact
information is not publicly available. Kickstarter would
not reveal Ottun’s contact information to Entrepreneur
for privacy reasons, but confirmed that it reached out
on our behalf. We have yet to receive a response from
Ottun.
Related: For This Cat Cafe, Crowdfunding With
Kickstarter 'Was Never About the Money'
The fraudulent campaign raised more than 17,000
pounds, or approximately $26,810, which was more
than the genuine campaign managed to raise. Sole says
the diversion of dollars to the copycat project resulted
in her not hitting her goal on Indiegogo. She still
received the money raised -- a little over $18,000 --
however, on Indiegogo, campaign owners who don’t
meet their flexible funding goal pay a 9 percent
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commission on their funds versus the 4 percent paid by
goal achievers. In Sole’s mind, she paid more to raise
less money.
Still, it’s not just about the money. Sole is on a crusade
to find out more and do what she can to prevent this
from happening to other people, claiming her brand has
been tarnished. “It is about doing the right thing. I refuse
to let anybody do things that are illegal or immoral. I am
very passionate about it.”
Unfortunately, preventing bad things from happening in
the Wild West of crowdfunding is, because of current
regulatory frameworks, something akin to Don Quixote
fighting his windmills.
There’s no legal precedent for this sort of legal
protection of intellectual property, says Sole’s
intellectual patent attorney, Loren Donald Pearson. “We
haven’t seen the scam perpetrated by anyone else.”
Related: Crowdfunding Nearly Tripled Last Year,
Becoming a $16 Billion Industry
While it’s a pretty easy scam to run, it’s a pretty near-
impossible scam to litigate with any financial success.
When you are talking about the micro-investments that
power crowdfunding campaigns, Pearson says most
lawyers will advise you not to “throw good money after
bad.” Why? Not only is a legal consultation likely to cost
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more than most crowdfunding investments, but the
inventors who are attracted to crowdfunding in the first
place often don’t have extra money to spend in the first
place. “They are in a phase where they are trying to
raise money, not spend money,” says Pearson.
Sole has a map on her wall with cargo ships carrying her Pluck N' File device all over the
world for inspiration.
Image credit: Dawn Sole
Sole is determined to seek retribution, though, and
Pearson says their best, most realistic goal is to obtain a
list of all of the people who donated to the fraudulent
Kickstarter campaign. Pearson says he suspects some
of those investors may have been in on the scam; if they
contributed money to push the funding over the
$25,000 threshold, they would not only get their cash
infusion back, but the money of the unknowing
investors, too, who would have been encouraged to
contribute to a campaign already well on its way.
Pearson also wants to help repair any damage to Sole’s
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reputation by getting in touch with unknowing donors.
Kickstarter says that its fraud detection system worked,
given that the copycat campaign was flagged and
suspended before any money exchanged hands. “We
invest heavily in keeping Kickstarter trusted and safe.
Our integrity team uses complex algorithms and
automated tools to identify and investigate any potential
abuse of the system. And we don't hesitate to suspend
projects that break our rules, as we did in this case,”
says spokesperson Justin Kazmark.
But Sole says that Kickstarter should be doing more due
diligence than it is currently doing. She wants FINRA,
the Financial Industry Regulatory Authority, to issue
more guidelines and keep a tighter leash on
crowdfunding platforms, having sent them more than
three dozen packets of research and materials on her
case.
Related: Reddit Co-Founder: Crowdfunding Is
Powering a Second, Much Bigger Renaissance
Meanwhile, industry leaders in the crowdfunding space
say that kind of tightening of the screws on the
regulatory throttles for crowdfunding platforms would
handicap the system to the point of making it
ineffective.
Alon Hillel-Tuch, co-founder of New York City-based
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crowdfunding platform RocketHub, has been working
with lawmakers and regulators for years to write rules
for equity crowdfunding, the type of crowdfunding that
involves entrepreneurs selling stakes in their
companies. In his mind, demanding checks on every
campaign would make crowdfunding cost-prohibitive.
“Crowdfunding platforms receive a lot of project
submissions, and are only able to do a certain level of
background checks,” he says. “However, a full due-
diligence on every single project and the business
merits of their campaign is not something any platform