Thread by @dsmart

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This past Friday, a backer lost his small claims court bid to force CIG to refund him.

In the thread below, I already addressed this issue, and what it means for other backers going forward.

https://twitter.com/dsmart/status/1018514650231705602

The brave souls (the anti-MSM) over @MassivelyOP who have never shy away from writing about the ups and downs of the project, also have a good article which also fills in some info regarding the backer

massivelyop.com/2018/07/16/sta…

As this issue is beginning to get legs, I wanted to dispel some misconceptions & misinformation currently being spread by the usual suspects.

First, @Charlie_L_Hall for @Polygon already looked into this with two sourced mega-whale backers in Dec 2017

polygon.com/2017/12/13/167…

In my thread from over the weekend, I point out that the 30-day refund in FAQ, pertains to items bought by mistake, due to buyer's remorse etc. It bears NO relation to 14-day refund that governs backing/pledging the project by way of game packages, ships, JPEGS of ships etc

The backer's loss in small claims court bears NO relevance to the validity or lack thereof of his claims for a refund.

He "lost" because he failed to make a case for why the court should hear his case. As a result, the judge simply enforced the arbitration condition in the TOS.

This is relevant because according to my tracking of the TOS, it is clear that this backer had accessed the game AFTER 08-29-2013, which is when the arbitration clause first appeared in the TOS.

I track all TOS versions below:

dereksmart.com/forums/topic/s…

This would explain why he didn't bother to mention in his complaint that he wasn't subject to the arbitration clause.

As a result, the judge dismissed his complaint without prejudice - meaning that he could re-file if wanted to - or go to arbitration as per the TOS

Now here's the problem and why I sounded the alarm about these TOS changes since 2015.

CIG had pledged to deliver the game by Nov 2014.

However, by that date, they had increased the game scope and raised $65M

robertsspaceindustries.com/funding-goals

I also track all the game's released in a dedicated forum. You can see the dates in this image.

dereksmart.com/forum/index.ph…

Now, if you noticed that they added the arbitration clause to the TOS that came with the FIRST release of ANY build of the "game", give yourself a pat on the back.

That's what they did with the 08-29-2013 release of the hangar module

Backers were now forced to arbitration.

If you took the time to compare - as I had done at the time - their major build releases to major TOS changes, you will see how they used those releases to continue stripping backers of rights and incentives they previously had.

This is where the scam started.

CIG already knew they were incapable of shipping the games as promised, and by the time promised. So they started to create legal cover for themselves, by walking back protections they had already given to backers.

Trusting backers who had no reason to doubt that CIG would deliver the games promised, kept helping CIG go deeper and deeper into technical debt by giving them money each time they increased the scope of the game.

It's their money - we don't care.

However, those TOS changes makes it nigh impossible for backers who have decided they'd had enough, to get their money back.

If you backed the game before 08-29-2013, and NEVER accessed it again, according to the prevailing TOS, you still may not be entitled to a refund.

You see, arbitration aside, the TOS language regarding "pledges", has always been consistent.

The only difference is that the latest version, tightens up the language used

See Section IV Fundraising & Pledges

robertsspaceindustries.com/tos

The arbitration clause simply prevents a band of backers from going to some attorney who will then take the case without any money up front, then seek to get a class action suit going - and completely destroy CIG in the process.

That's all it does. Nothing to do with refunds.

The key here is, a group of backers, each with say $250 in the game, aren't likely to seek arbitration individually over an amount that's less than the costs to bring the action. Even if they win & get their legal costs back, it's still a risk of throwing good money after bad.

But if you have that same group go to an attorney or law firm that agrees to take their case, their individual amounts is immaterial. Thus, depending on merits, make it a lucrative proposition for the law firm or attorney to pursue because they get to recover costs from CIG.

For any backer to get a case heard in any court, even in small claims court, they have to PROVE they're NOT subject to the arbitration clause because they did NOT access the game before 08-29-2013

There are VERY FEW backers who would qualify under that instance.

In any instance, whether in a class action, small claims or arbitration, the issue of how much are you entitled to in a refund becomes a hilarious issue.

Let's look into that.

In their TOS, backers agreed that they are only entitled to a refund based on what CIG has not "earned" during the development.

So if you backed the game with $500 in Oct 2012, and asked for a refund in 2018, how do you determine which portion of your money has been "earned"?

It's even more hilarious when you consider that as of the 3.2 release in June 2018, ACCURATE tracking of the game's promised features shows that it's not even 18% completed.

starcitizentracker.github.io

If you paid a builder $500K for your house in 2012, then in 2018 incomplete, you ask for your money back when they only have maybe 18% (the foundation, walls, plumbing, electricity) done, how much of your money are they going to give you back?

I told you it was hilarious.

So you see, that language like the TOS itself, is defective right off the bat. But neither backers nor CIG put much thought into how they would reconcile this in the event of a legal action whereby the court enforces the TOS.

That $25K backer, how much would CIG claim they are entitled to be refunded?

Also don't forget that asking for a refund terminates your account, you lose all your assets etc.

So according to CIG, your $25K refund could be $10. And you still have NO GAME!!!

Now for the fun part.

If you had previously backed the game, accessed it after the June 2016 TOS then NONE of this matters because they neither have to give you a refund of ANY kind, nor a game.

I wish I was joking.

So you see, it doesn't really matter if you go to arbitration, small claims, or a class action, CIG is going to argue that they have "earned" your money, and are under NO obligation to give you a refund. Ever.

So that's the culmination of all the TOS changes these past years.

To be clear, I can't think of ANY circumstance whereby that bs stands up to legal scrutiny. And CIG knows it. That's why it's going to take a determined backer to bring an arbitration case that challenges that very aspect of the TOS.

And even if a group of backers who never agreed to the arbitration clause manage to bring a class action suit, they will have to challenge the TOS definition of what "earned" means.

Guess where we go from there?

If you said financial accountability, then give yourself another pat on the back.

During discovery, CIG will have to disclose how much money they raised, how much they spent - and on what.

And THAT is what is going to determine their claim to have "earned" the backer money.

Funny how, in one of the TOS revisions, they completely removed that specific language about financial accountability to backers for the project. By doing so, unless and until you get arbitration or lawsuit going, a backer is NEVER going to gain access to that financial info.

That's basically where we are now.

So don't get confused by this backer small claims issue because it's immaterial to the bigger picture that determines whether or not a backer is entitled to a refund or even a game - of any kind.

CIG has basically scammed backers out of $190M (to date - that we know of), challenging them to bring legal action if they ever want their money back, and basically saying they've "earned" the money even though they have yet to ship a finished game of any kind.

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