Online venture funding leading to disputes – Taipei Times

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COOKWARE SCHEME:
A possible scam involving crowdfunding for a venture that has so far produced no products is attracting attention from prosecutors

  • By Chien Hui-ju
    and Jonathan Chin / Staff reporter with staff writer

Democratic Progressive Party Legislator Michelle Lin (林楚茵) yesterday urged the government to combat scams on crowdfunding platforms after a cookware project allegedly defrauded NT$3.5 million (US$125,322) from contributors.

A scalable cooking pan project began raising funds online in late 2019 and promised to deliver the product to contributors in March last year, Lin told a news briefing at the Legislative Yuan in Taipei.

In February last year, the project notified 1,659 funders that the delivery would be delayed while declining to issue any refund, she said.

Attempts by donors to contact the project initiator were blocked by the funding platform, which invoked an obligation to protect user privacy, Lin said, adding that her efforts to help her constituents who contributed money to the project have been in vain.

The corporation that owns the platform has informed users via a post on its Web site that it is not a contractual party to the projects and that it is not liable for any resulting commercial disputes, she said.

“Crowdfunding platforms are behaving like online-based vendors in that they take a share of the profits, but shun the responsibility to assist consumers when disputes occur,” Lin said.

Crowdfunding disputes have increased from 47 incidents in 2019 to 536 last year, with 203 occurring in the first seven months of this eyar, she said, citing data from the Executive Yuan’s Department of Consumer Protection.

The platforms’ owners should not be able to shrug off responsibility for scams that their companies enable and profit from, Lin said, adding that the practice makes them complicit in fraud.

The Ministry of Economic Affairs must not excuse inaction by saying that the wide range of crowdfunding activities is too difficult to regulate, Lin said.

Hsiao Hsu-tung (蕭旭東), an official representing the Department of Commerce at the media briefing, said that the platform’s liability disclaimer appears to be invalid in the case of the cookware project.

The government is planning to draft rules that strengthen consumer protection, he said.

Department of Consumer Protection Deputy Director-General Wu Cheng-hsueh (吳政學), who was also present at the event, said that the case is being investigated by the New Taipei City Government.

If it becomes apparent that no cookware had been manufactured and refunds were not given, the authorities could request prosecutors to indict the project initiator for fraud, he said.

Existing laws provide a framework for regulating crowdfunding platforms, Wu said, adding that the Ministry of Economic Affairs should be able to fulfill its watchdog role under present legislation.

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