He only has an obligation to refund if he decides to cancel the project. As far as we know, the project is still continuing so he has no obligation to fulfill the refunds.
In the faq you linked, here's a choice quote:
>It's not uncommon for things to take longer than expected. Sometimes the execution of the project proves more difficult than the creator had anticipated. If a creator is making a good faith effort to complete their project and is transparent about it, backers should do their best to be patient and understanding while demanding continued accountability from the creator.
"As far as we know, the project is still continuing so he has no obligation to fulfill the refunds."
While I agree with that completely, there's two different sorts of deliverables promised as rewards - the actual project output, which as you point out may only be delayed and not cancelled, but also the "trinkets". If he's really run out of money without having already paid for the tshirts and usb keys (and if it were me, probably also the "special packaging" promised for some rewards), then I think he's done something _very_ foolish.
It is incorrect to state that he is only obligated to refund if he DECIDES to cancel the project. By the terms of service, he is obligated to refund if he is either unable or unwilling to provide the rewards. Legally, unwilling loosely corresponds to deciding to cancel the project (or, at least, deciding not provide the rewards), but inability would be judged by looking at capacity, not intent.
That quote is relevant if he is still making progress on the project. But I haven't heard any evidence of that. Unless he at least announces that he's still working on it, I think it's reasonable to treat it as canceled.
Or backers should go ahead and threaten a lawsuit because that appears to be the only way to force the developer to meet the 'being transparent' requirement in the terms quoted above?
In the faq you linked, here's a choice quote:
>It's not uncommon for things to take longer than expected. Sometimes the execution of the project proves more difficult than the creator had anticipated. If a creator is making a good faith effort to complete their project and is transparent about it, backers should do their best to be patient and understanding while demanding continued accountability from the creator.