Indiegogo Signals Tougher Stance on Shady Campaigns, Will Do 'Everything in Our Power to Recover Funds'

Crowdfunding platform Indigogo has signaled a harder stance on questionable, unprepared or otherwise shady campaigns found on the site. On Tuesday, the popular service updated its terms of use in an effort to hold campaigners more accountable to fulfilling their promises to potential backers, as well as adding more oversight "when things don't look right."

The terms update includes several new requirements for campaign owners, such as providing frequent updates, certifying an address and insuring that any previous successful campaigns have been completed before starting new ones. The site reiterated that campaigns cannot be self-funded. Indigogo also updated its section on recovering funds, saying in "egregious" cases, it reserves the right to use a third-party collections service to recover funds for backers.

"We will not tolerate abuse of our platform," writes Kerry Barker, Indiegogo's head of trust/safety, in a blog post. "If an entrepreneur breaches our Terms of Use or doesn't fulfill their obligations to backers, we will take appropriate action against the campaign. We will do everything in our power to recover funds for our backers, including contacting third-party collections agencies. In some cases, if the situation is not egregious, we will reach out to the campaign owners to try to work with them before taking definitive action. Overall, we pledge to do what is fair."

There have been several crowdfunding follies over the years, including ones for things like baby drones and a Scott Weiland Pledgemusic campaign in which fans of the late singer failed to receive their pledge gifts. One of the most notorious campaigns was for the Laser Razor, a futuristic shaving tool that raised over $4 million via Kickstarter before being banned because it didn't have a working prototype. (It later started a campaign on Indiegogo and raised over $500,000. A year, still no lasers in medicine cabinets.)

An independent analysis of Kickstarter conducted in 2015 found that 9 percent of projects failed to deliver on rewards, with 8 percent of pledge dollars going to failed projects. That said, the research -- conducted by U. of Pennsylvania -- found that 65 percent of backers said they received the reward on time.