The update, under section 4 , explains that when creators post projects on Kickstarter, they're inviting backers to form a direct legal agreement. Kickstarter explains that it is not a part of this contract, which is another way of saying that you can't sue it when things go wrong.
- they post an update that explains what work has been done, how funds were used, and what prevents them from finishing the project as planned;
- they work diligently and in good faith to bring the project to the best possible conclusion in a timeframe that's communicated to backers;
- they're able to demonstrate that they've used funds appropriately and made every reasonable effort to complete the project as promised;
- they've been honest, and have made no material misrepresentations in their communication to backers; and
- they offer to return any remaining funds to backers who have not received their reward (in proportion to the amounts pledged), or else explain how those funds will be used to complete the project in some alternate form.
If creators are unable to satisfy these terms, they may be subject to legal action by backers.
That seems pretty clear, but it still puts backers in a tough spot when a project fails. The onus is on them to pursue legal action. The main takeaway here seems to be that if you're upset over Neal Stephenson's Clang dissolving , you should direct your phalanx of lawyers at him, not Kickstarter.