July 2, 2022

How the ‘Biggest scam in Kickstarter history’ almost worked

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kobe-red-nail1By Eric Larson From Mashable

Rarely does a crowdfunding platform pull the plug on one of its projects.

But on Thursday, June 13 2015, Kickstarter suspended all funding to a campaign called Kobe Red — just hours before the month-long endeavor was scheduled to close.

Operated by a group called Magnus Fun, Inc., the project claimed to have been raising money for a brand of Kobe beef-based jerky, made with 100% organic feed- and beer-fed Japanese cows. In just under four weeks, Magnus accumulated more than $120,000, close to 50 times its initial goal of $2,437. It had racked up a whopping 3,252 backers.

So why did Kickstarter suspend the entire project at the last minute? Evidently, the project was a scam.

From an outsider’s perspective, the page raised a few concerns. For one, the project didn’t list creators’ names, which isn’t a requirement, necessarily, but more or less a nicety for backers to meet the people collecting their money. Another red flag: the video filmed a sloppy slideshow of generic Kobe beef images, and again, was completely void of the project’s founders.

Most bizarre of all were the taste testimonies, which the team claimed to have conducted at this year’s SXSW festival in Austin, Texas. They consisted of four ambiguous iPhone screenshots. From the page:

Screen-Shot-2013-06-19-at-10.41.33-AM“We exchanged phone numbers with everyone that got a sample and asked them to text us and let us know what they thought of it, the reviews speak for themselves. By the way, these are just a fraction of the great reviews and calls we got, by 5:10pm that day the phone we used for our ‘jerky taste test’ ran out of power from all of the responses -it was awesome (check the battery icon on the screen shots)

But the money rolled in despite the project’s vagueness — really rolled in.

Los Angeles-based filmmakers Jason Cooper and Jay Armitage had been researching for their documentary project, Kickstarted, when they first discovered Kobe Red. The film will highlight three crowdfunding projects, from beginning to end, and Kobe Red seemed an interesting group to profile.

Cooper emailed Magnus through the “Contact Me” link on the Kickstarter page in mid-May. Here’s a screenshot, provided by Cooper, of the initial exchange:

According to a blog post written by Cooper, the two messaged back and forth for a few weeks, but nothing materialized. He asked Magnus to answer some questions via webcam, but the group suggested he use film from a recent taste test in Long Beach, Calif., which they claimed they would send instead.

The taste test video from Magnus never arrived.

Then, Cooper said, Magnus updated its Kickstarter page with an annoucement: that Kobe Red would be featured in Kickstarted (the message has since been removed).

“It was really misleading,” Cooper told Mashable. “We hadn’t even had the chance to explore their project that deeply, and they were already telling their backers they’d be featured in our documentary. Something seemed weird, so we decided to do a little digging Something seemed weird, so we decided to do a little digging.”

Mashable attempted to reach Magnus for commentary, but the entity had already deleted its Kickstarter account, contact information and website, appearing to have disappeared altogether.

According to Cooper, a handful of commenters on Kobe Red’s page had raised more suspicions (those comments have also been disabled). Several, Cooper said, challenged Kobe Red’s claim that it had already stocked thousands of pounds of meat; Kobe beef just became legal to export into the United States last year, so the likelihood that large a supply existed for such a high number of backers seemed slim. Others aired concern about the company’s lack of information.

“I got a few emails from our backers” — Kickstarted is raising funds through Kickstarter, too — “that said they thought this was an obvious scam,” Cooper said. “Knowing that we weren’t the only ones really helped make this clear.”

The pair hired a private investigator to look into the matter, then published their findings in an in-depth Reddit post. Conversation around the project mounted, both on Reddit and on Kobe Red’s page. Then, last Thursday, all backers received an email indicating the project had been cut.

Quartz reports that, if successful, this would have been the most prevalent heist in Kickstarter’s four-year history. Kickstarter fraud attempts are not common, but as the number of projects increases — the site has launched more than 103,000 to date — so does the monitoring challenge.

Ultimately, it’s the community’s responsibility. In its FAQ section, the site says it’s up to a project’s would-be funders to evaluate its legitimacy. If something seems strange, anyone can submit a fraud report to the site’s “Manager of Trust and Safety.”

Mashable reached out to Kickstarter, but the company declined to comment, adding that they never discuss why projects are suspended. However, it’s safe to speculate that the suspicions raised through Reddit and the group’s comments section meant enough people flagged the project — enough to kill it.

“There are different ways to look at this. The first is that, yeah, crowdfunding has a problem and can be taken advantage of,” Cooper said. “But I actually think this is a great example of crowdfunding working the way it should I actually think this is a great example of crowdfunding working the way it should.

“There’s no way that Kickstarter, or any other crowdfunding platform, can fully police the amount of projects coming in. And seeing a community of people from across the Internet like this shows its strength and potential for the future.”

Of course, questions still remain about Kobe Red: Who was involved with Magnus Fund, Inc.? Was this an actual scam attempt? Or, maybe, was it really just a poorly executed campaign?

Do you think Kickstarter has become more susceptible to scams? Or is the community of users a strong enough police force? Tell us what you think about it below.

Images courtesy of Flickr, Tarale Draws!, and of Kickstarter, Kobe Red

For more on this story go to: http://mashable.com/2013/06/21/kickstarter-scam/?utm_campaign=Feed%3A+Mashable+%28Mashable%29&utm_cid=Mash-Product-RSS-Pheedo-All-Partial&utm_medium=feed&utm_source=feedburner&utm_content=Google+Feedfetcher#uQGaaQyhIaqg

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