There’s a Formula to the Perfect Kickstarter Scam | Dan DeSimone (2022)

There’s a Formula to the Perfect Kickstarter Scam | Dan DeSimone (1)

UPDATE 3: See my guide of tips and tools for avoiding getting scammed on crowdfunding sites like Kickstarter and Indiegogo. The best part? They’re all free.

UPDATE 2: The Nbition website has been taken down

UPDATE: See Part 2 for the latest news on the Chiu brothers.

There is a school in Hong Kong teaching people the recipe to create the perfect project on crowdfunding sites like Kickstarter and Indiegogo. The problem is, all of these projects are a scam. In my research, I have found a half dozen ‘businesses’ and projects that can all be tied back to Nbition Development Limited (edit: 04.06.17 11:00 the Nbition website – nbition.com – has been taken down, web archive link added). Not a single one of these projects has successfully delivered a product to their backers and each of them are a Kickstarter scam.

Nbition Development Limited

The story of Nibition starts with the Arist smart coffee brewer launched on Kickstarter in October of 2014. With a very detailed plan and great looking product shots, Arist quickly surpassed their goal by almost 10x. Everything seemed kosher with the product and every major tech new outlet was covering their success. Now, two and a half years later, backers are still commenting that they have not received their pledged rewards or refunds. I read through the 41 updates that have been posted to the project, the most recent of which was March 10 of this year, and they alternate between issues with product, issues with funding, promises of delivering a better project, and talk of the founders global travel/vacations.

The Kickstarter scam project lists Benson Chiu and Nelson Chiu as the chief officers of Arist. Remember these names, as they become important later. There is no mention of where they are based in the project description or in the updates, but there are vague references to Hong Kong being their location. Even the Arist website does not list an office location. With some quick searching through Hong Kong incubator programs, I found that Nbition Development Ltd. is the supposed incubator that the product was developed in. While Nbition calls themselves an engineering incubator, the only project referenced to is Arist. They also have Nelson Chiu listed as the main contact (pg. 62).

To recap so far: the Arist startup is being incubated at Nbition Development, and the main contact for both companies is Nelson Chiu. Nbition has not publicized any other startups that they are incubating, and Arist has not delivered a finished product in the three years since the campaign.

Znaps Limited

Znaps*, launched on Kickstarter in July 2015, promised to bring the magnetic connection seen on Mac laptops to mobile phones and more. The creator of the project Phiona (Pui Woon Leung) clearly states that they are based out of Canada. The project is even being funded in CAD, so that seems to check out. Looking through the project, everything seems to be in order from a technical perspective. They even admit they are not the first product on the market to have this capability, but that they have a patent on the product (no further details given). The project goes viral and closes at $3 million CAD.

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Alas, Znaps is yet another Kickstarter scam. In the months following the close of the campaign, the backers continued to post steady updates about the project. That was until they supposedly started to encounter manufacturing issues every step of the way. First the magnets were not strong enough, then the connection did not work, and even the LED indicator light was ‘too bright’. For what was pitched as a finished product, there was clearly something off.

Another quick internet search for Znaps Limited brings up a Hong Kong company registered to, you guessed it, Nelson Chiu. This information was circulated through the Kickstarter comments for months and the relationship was denied by Znaps. They claimed Znaps Limited in Hong Kong was only a distributor of the product and was in no way related to the project.

Now, almost two years later, all updates have stopped and no backers have posted any indication of receiving a product. There are reports out there that Znaps has begun distribution of their product without fulfilling the rewards. In fact, their website has the products available for purchase (though not the same assortment promised on Kickstarter).

As I mentioned, the Znaps website has their product available to purchase, and it turns out some people have received the item from the site. There have been a few posts to a Kickstarter Znaps group unpacking the product they received, and in all cases the same address is listed:

FROM: Znaps Limited
Unit 111-113, 1F, Enterprise Place 5 Science Park West Ave,
Sha Ting, Hong Kong

There’s a Formula to the Perfect Kickstarter Scam | Dan DeSimone (2)

So what is the importance of this address? Why would a Canadian company, manufacturing in China, fulfill distribution through an office building in Hong Kong? They would do that when that sames address is the office of Nbition Development Ltd., which I will remind you is registered to Nelson Chiu.

*Disclosure: I personally backed Znaps on Kickstarter, and have not received any proof of a final product.

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Toasteroid: Another Kickstarter Scam Connected to Nbition

I will save you the set up for Toasteroid, an app controlled smart toaster. It follows the same pattern as the last two with a successful Kickstarter project. Though something was a little different about the launch of the project on Kickstarter. One morning I received an email inviting me to check out a Kickstarter project about a smart toaster. The problem was, the email did not come from Kickstarter. Great, i thought, some project sold my information. Whatever.

I scroll to the bottom of the email and see an option to unsubscribe. Okay, at least these people aren’t bad enough to not let me unsubscribe. Now this is strange enough so far, but the message received on the confirmation page takes this to the next level:

“You have been removed from Znaps 28000 Backer with Count.”

So why is this email associated with a Znaps mailing list? Best case, they sold our email addresses and contact information. Worse case, it’s being run by the same group of people. Unfortunately, I no longer have a copy of the email, but you can see a bunch of people received the same email and posted about it in the Znaps Kickstarter comments.

The only piece of information apparent on the Kickstarter page is the creator, Chun Wai Matthew Yu of Brooklyn, NY. A WHOIS on the domain does not give any more information. I feel like I am at a dead end with this connection, until I see the 3D interactive model widget they have towards the bottom of the page. It links out to a Toasteroid profile on a service called Sketchfab. Normal enough, until you look at the URL for the profile which is: hxxps://sketchfab.com/nbition. Why would they not use Toasteroid as the ‘owner’ of the project? It would be a huge coincidence if they just happened to pick the same user name that can be linked to several other scam Kickstarter projects.

But that’s not all…

Auxillite, another Kickstarter following the same story, was funded only a few months ago in October 2016. Not nearly as successful as any of the others listed, they still raised over $150K. The profile for Auxillite says they are based out of New York, and the creator is listed as Chun Wai Matthew Yu (a.k.a. The same name and location from the Toasteroid campaign). They use the same interactive 3D prototype on the Kickstarter page, but at least they were smart enough to use a different account registered as Auxillite.

On another note, a duplicate project for Auxillite was posted to Indiegogo a month after the Kickstarter. I won’t be going into detail about it, but think it is worth mentioning.

There is more information available out there that I did not have time to fact check or include. Much of it can be found on a particular reddit thread and through Google.

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TL;DR (Too Long; Didn’t Read)

Nbition Development Limited and the Chiu brothers can be connected back to at least four different Kickstarter projects: Arist, Znaps, Toasteroid, and Ausillite. None of these products have been delivered to the backers, and in the case of Znaps, are already being sold and distributed.

Here is a handy chart showing the connections between the Kickstarter scams mentioned in this post:

There are probably more projects out there, and I intend to keep my eye out for them. At the bare minimum, the Chiu’s have provided support to all four of the projects through Nbition (also look at KickstartHK – whose web presence has disappeared). These projects have raised over $4 million USD, which at the 30% cut KickstartHK charged, is over $1 million USD.

It is quite clear that the Chiu brothers have developed a formula for crowdfunding site success, so it is more important than ever to be wary of too-good-to-be-true products.

See my guide of tips and tools for avoiding getting scammed on crowdfunding sites like Kickstarter and Indiegogo. The best part? They’re all free.

Like this post and want to see more like it? Let me know in the comments.

FAQs

How can you tell a Kickstarter is real? ›

In order to launch a project on Kickstarter, a creator must first go through steps to verify their identity, this ensures that they are a real person. The creator's verified name is then displayed publicly in the creator bio.

How do I start a Kickstarter scam? ›

How To Run A Kickstarter Campaign Scam - YouTube

Do backers make money on Kickstarter? ›

Some projects that are funded on Kickstarter may go on to make money, but backers are supporting projects to help them come to life, not financially profit.

Do you get your money back if a Kickstarter fails? ›

Kickstarter is not a store and we do not issue refunds. When you back a project, you're supporting a creator's right to try to make something new—and agreeing to go along for the ride. For more information, please read our Terms of Use.

Should I Trust Kickstarter? ›

Kickstarter is responsible for providing a safe and reliable platform for our users. This includes creating clear rules for creators and backers who use Kickstarter, and monitoring our site for compliance with those rules.

Is it safe to back a Kickstarter? ›

It's mostly safe to back a Kickstarter project, as Kickstarter does not pay the creator unless their fundraiser is successful. However, there is always a risk that a creator may not follow through on their project. You can minimize this risk by researching the creator and their project before backing them.

How often do kickstarters fail? ›

Plus, projects are highly successful once they have the money. CNBC found that only 9% of funded projects fail to deliver. Similar to Chen's concert, Kickstarter works by pledging money. So, if one project needs $1,000, you can promise $100.

How do you withdraw money from Kickstarter? ›

There is a 14 day window following your project's deadline where we will be collecting and processing the pledges. After the 14 days have passed, a payout will be initiated and the funds will be automatically transferred directly to your bank account.

What happens when a Kickstarter is overfunded? ›

Any funds raised beyond the goal will help the creator to cover any manufacturing or shipping costs related to their add-ons. In other cases, overfunding leads to better margins and the creator may even profit from the project.

Does Kickstarter take a cut? ›

If your project is successfully funded, the following fees will be collected from your funding total: Kickstarter's 5% fee, and payment processing fees (between 3% and 5%). If funding isn't successful, there are no fees.

What is the maximum amount you can borrow from Kickstarter? ›

US-based projects: $10,000. UK-based projects: £8,000. Canada-based projects: $13,000 CAD.

How often do kickstarters fail? ›

Plus, projects are highly successful once they have the money. CNBC found that only 9% of funded projects fail to deliver. Similar to Chen's concert, Kickstarter works by pledging money. So, if one project needs $1,000, you can promise $100.

How do kickstarters work? ›

Kickstarter makes money by taking 5% of the total amount of money that is funded on the site. 1 It uses this money to turn a profit that pays for the costs of running the site, including advertisement and employee payment. Those who use Kickstarter to raise money earn their profits differently, however.

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