SCAMS BULLETIN Host Jay White is an inactive attorney in San Mateo County, California.

A Free Public Service

November 25, 2021

CROWDFUNDING SCAM

Courtesy Federal Trade Commission

Scammers could be behind crowdfunding efforts and take your money without delivering what they promise.

Crowdfunding can help raise money for beneficial purposes or to develop a new product or invention. To encourage investors, the organizer may promise something in exchange for contributions. Investors might benefit by receiving a payout once the invention is profitable, be the first to get the new product, or get the new product at a discount later.

When you give money to a crowdfunding campaign, it goes directly to the campaign organizer. But a dishonest organizer might lie about the project, product, and timeline. And they might lie about the rewards you will receive once the product is completed.

Before you pledge funds to any crowdfunding campaign, research appropriate related things:

*Who created the campaign? Find the name of the organizer on the crowdfunding page and do your own vetting. If you can’t find anything about that person, or the details don’t match what they’re telling you, that’s a sign of a scam. Search for the name of the organizer and project with the words “complaint,” “review,” or “scam” to see if anyone has already had a negative experience.

*What’s the purpose of the campaign? Be clear what the funds are for and what you should expect from your contribution. Not all campaigns promise you will receive anything in return.

*What happens if the project doesn’t succeed? There’s no guarantee that the project will be successful and completed. Find out what happens to your money if the project doesn’t get going. Can you expect a refund and how will you get it?

If you come across a crowdfunding scam, report it to ReportFraud.ftc.gov, your state Attorney General, and the crowdfunding platform.

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