Earlier this week, the creators of Luci, a device that claims to inspire “lucid dreaming,” abruptly pulled the plug on its Kickstarter crowdfunding project amid a flurry of fraud accusations, according to WSJ.com’s Digits blog. By the time it was pulled, more than $363,000 Canadian dollars (informally known as “looneys”) had been pledged. (While the Digits post implies the funds were returned to project backers, on Kickstarter pledges are not collected from the backers’ credit card accounts until the close of the project. In either event, the backers did not lose any money, though they did have a rude awakening.)

Kickstarter requires its would-be fundraisers to step up when it comes to transparency.

Quote from Digits blog:

Kickstarter … verifies the identity, address, bank account, phone number and email for the project creators. It also tries to verify that the project submitted is indeed a creative project (not for instance, a project to fund a personal vacation). Projects must have a distinct beginning and end. Kickstarter warns backers to carefully review a project’s materials before pledging money. Users can also alert Kickstarter if they suspect a project is inappropriate or fraudulent.

Meanwhile, Kickstarter also warns creators that they may face legal action (from backers) if they fail to fulfill their promises. So far, Kickstarter has hosted more than 100,000 projects, and of these, fewer than a dozen have been shut down because of fraud concerns, according to the company.

Read full post: Kickstarter Project Canceled Amid Fraud Accusations (WSJ.com Digits Blog)