A draft amendment put forward by Democratic Progressive Party (DPP) legislators on Thursday would require crowdfunding platforms to offer greater consumer protection.
Projects seeking financing via crowdfunding are increasingly becoming contentious, DPP Legislator Michelle Lin (林楚茵) said, citing Consumer Protection Committee statistics showing nearly 1,000 crowdfunding disputes over the past two years.
The Consumer Protection Act (消費者保護法) and other laws do not regulate entrepreneurs seeking financing through crowdfunding or hold them accountable for promises made to investors, she said.
Photo: Fang Pin-chao, Taipei Times
Crowdfunding platforms need to be regulated by a government agency, she said, adding that common disputes involve delayed delivery, a venture disappearing after collecting funds or products being of inadequate quality.
Lin said that she has held public hearings to help prevent and mediate disputes over the past two years, but that problems have been difficult to resolve without legal regulation.
Crowdfunding investment totaled more than NT$3.3 billion (US$117.38 million) in Taiwan last year, highlighting the importance of legal consumer protections, DPP Legislator Rosalia Wu (吳思瑤) said.
The proposal would eliminate loopholes while protecting crowdfunding campaigns that are legitimate and make efforts to deliver quality products to their investors in a timely manner, Wu said.
Disputes often arise when entrepreneurs fail to deliver the promised product and refuse to return invested funds, Wu said.
Crowdfunding is an innovative way to finance projects, but the platforms do not provide means to contact the manager of a project outside of the platform, DPP Legislator Chao Tien-lin (趙天麟) said, adding that the platforms must provide ways for investors to stay in touch with project initiators through other means.
Those who pledge funds to campaigns might not be informed of their rights or the campaign initiator’s obligations, Ministry of Economic Affairs Department of Commerce Deputy Director Liu Ya-chuan (劉雅娟) said, adding that legal disputes stem from crowdfunding platforms differing from traditional e-commerce sites.
“We will continue to advise platform managers to implement standards for what kinds of crowdfunding campaigns are allowed on their sites,” she said.
While crowdfunding transactions are regulated by the Consumer Protection Act, it is unclear what responsibilities the platforms have in the transactions, Department of Consumer Protection Deputy Director Wu Cheng-hsueh (吳政學) said.
Those investing in crowdfunded projects should use credit cards that include dispute resolution mechanisms, he said, adding that the committee is in talks with platforms about including guarantee procedures in campaigns.
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