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

May 20, 2022

CROWDFUNDING SCAMS

Courtesy scambusters

Crowdfunding is a way to raise funds for a specific cause or project by asking a large number of people to donate money, usually in small amounts, and usually during a relatively short period of time, such as a few months.

Crowdfunding is a $17 billion a year business in the US. Scammers tug at your heartstrings with stories of war victims or people desperately needing money for healthcare.

The war in Ukraine is fueling a huge rise in crowdfunding scams, robbing Americans and people who genuinely need help of millions of dollars. The advent of disasters and emergencies like Ukraine  have opened the floodgates for scammers.

Popular sites like GoFundMe, Kickstarter (mainly used for business projects), and Indiegogo, are trying to spot and remove the crooks but they’re fighting an overwhelming tide of scams.

Scammers use names of legitimate organizations to imply they’re backing a funding campaign.

Furthermore, it’s now easier than ever to set up an individual crowdfunding site independent of the big players. Crooks can buy a perfectly legitimate software kit that does all the work for them.

Many are easily moved by some of the stories that accompany individual campaigns.

HOW TO AVOID CROWDFUNDING SCAMS

Be cautious about donating to a friend’s Facebook funding appeal. Check with them first.

Educate yourself. Check if the crowdfunding organization provides guidance on scams — and read it. For example, GoFundMe offers help here: GoFundMe Trust & Safety.

Beware of campaigns that ask for donations in cryptocurrency/cybercurrency. Such payments are untraceable.

If you don’t know the individual or have never dealt with the charity, research their cause carefully. Have they been involved in other funding campaigns? What happened then?

Read any small print in the funding blurb to discover, for example, whether all donations go directly to helping the individual or charity or whether a proportion pays for administration costs.

Don’t act impulsively. Think before you donate.

Read the comments from other donors on the funding page. Be alert to warning signs from disgruntled givers.

Don’t assume that a site naming an individual in need of help necessarily has the victim’s blessing or that your money will find its way to them. If it doesn’t explicitly have their approval, don’t give.

If you want to donate to a disaster relief program, identify and research the organization behind it and, if you’re satisfied it’s genuine, donate directly to them.

If you suspect you’re a victim of a crowdfunding scam, notify whichever platform it was on and tell the Federal Trade Commission, http://www.ftc.gov

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