Don’t get caught in the trap of crowdfunding
Crowdfunding platforms like GoFundMe, Kickstarter, and IndieGoGo contain eager entrepreneurs and desperate, needy individuals. But they’re also packed with scammers. Make sure you don’t get caught in the trap of crowdfunding.
For instance, an Iowa woman raised thousands of dollars on GoFundMe for her daughter’s terminal cancer. This story would be heartwarming were it not for the fact that her daughter is perfectly healthy.
In another example, Triton claimed to have created a device enabling people to breathe underwater. Their IndieGoGo page pulled in $850,000 in just a few days. The problem was that the invention did not exist.
And, in yet another incident, a couple teamed up with a homeless veteran to start a bogus GoFundMe page. They claimed the vet had used his last $20 to buy gas for his wife, and they raised $400,000 to support him. Proceedings are still ongoing, but authorities allege the entire campaign is a scam.
Refunds
While some crowdfunding platforms will refund your money if a cause turns out to be a scam, most will keep a portion for themselves, so don’t plan on getting back every penny if you are caught in one of these scams. There’s also the possibility of a crowdfunding scam not being found.
Do Your Research
Don’t let the scammers ruin it for everyone else! Here’s how to check a campaign to see if it is accurate or a scam.
Whether it’s a heartbreaking story or a brilliant business venture you want to support, carefully research the campaign’s creator. Google the company or name and see what it says. If there is any possibility of fraud, stop immediately. Look up their street address to verify they’re using their real name. Check whether they’ve done any crowdfunding campaigns in the past.
If you’re looking at a charity campaign, your next step is to take emotion out of the picture. Study the campaign with pure logic. Does the story make sense? If you still think it’s legitimate, you can choose to donate to the cause. Or, you can take your caution one step further by contacting the campaign’s creator and asking for verification of their purpose and origin. And, if they refuse to answer your questions, opt-out.
Now you know what to look for so you do not get caught in the trap of crowdfunding. Share this with your family and friends, so they don’t get scammed. And, if you like this post, check out our MoneySmart Tips Blog for more.
