POP, a cool high-capacity gadget charger, got plenty of attention for its Kickstarter campaign, which raised $139,000. But the campaign creators are now refunding backers all their money after Apple(s aapl) decided not to approve the charger, which required Apple’s blessing because it was integrating its new Lightning chargers.
The news is interesting for a couple of reasons. First, it’s one of the biggest refunds by a Kickstarter campaign and may be instructive for other project creators who have to go that route. And it also highlights the control that Apple continues to exert over its ecosystem.
Jamie Siminoff, whose Edison Junior design lab created POP, said in an email to backers that Apple decided not to approve the charger because it doesn’t want to have the Lightning charger work alongside other chargers, including its own old 30-pin connector. Siminoff said that defeats the purpose of POP, which was to recharge all of a user’s devices, regardless of the charging interface: 30-pin, USB, or Lightning.
So Siminoff, who also just launched a new Kickstarter for hardware projects called Christie Street, decided that instead of holding out hope for a reversal or delaying POP’s December delivery date, he would refund every supporter their full pledge. That means Siminoff will eat $11,000 in processing fees to Amazon and Kickstarter’s 5 percent cut.
Siminoff realized, however, that refunding backers their money isn’t exactly cut and dried on Kickstarter. Amazon(s amzn), Kickstarter’s payment processor, doesn’t have a mechanism for refunding money after 60 days. So Siminoff has turned to his Christie Street platform to get people their money. He’s putting the funds into Christie Street accounts, which backers can claim via PayPal (s ebay) or through a check. The payments will go out in January.
The move is a self-serving, Siminoff admitted to me, giving Christie Street some attention as it competes with Kickstarter. But he said the move was the right one because Christie Street is designed to provide refunds while Kickstarter doesn’t have a formal mechanism for that. And he said the process is faster than if he delivered the money manually.
Siminoff’s move is interesting because it gets at the question of what creators should do when their project can’t deliver. Not everyone can give back 100 percent of the pledges because they might have used up some of the money before realizing they have to give up. But there should be more of a framework to help creators return unused money if they can’t or choose not to complete their project.
Currently, Kickstarter requires creators who successfully raised money but can’t deliver to “fulfill all rewards or refund any backer whose reward you do not or cannot fulfill.” Kickstarter’s policy doesn’t lay out how to execute a refund beyond pointing to Amazon for U.S. projects or Kickstarter for U.K. projects though its support team does provide help. And it doesn’t say how much a backer can expect to get back if anything.
In most cases, projects do eventually deliver. A UPenn study found that only 3.6 percent of projects fell short of completion. But as the number of failed projects grows with the platform, handling refunds will become a bigger issue.