Have you ever received an email from a Nigerian prince? You know, the guy who can hook you up with $32 million if you simply pass along your bank account number?
Amazing deal, right? Of course not. Most of us know that scam. It’s been around practically since email became popular in the 1990s.
These days, the online scams are much more sophisticated—but all of them involve one thing: trust. And whenever trust is involved, scams are present too.
One of the most recent trends in scamming involves crowdfunding. For the unaware, crowdfunding is simply a way for a group of people to support a cause, project, or person that otherwise might not have the tools or resources to raise money.
Using crowdfunding platforms like Kickstarter or GoFundMe, someone can support their favorite band’s new album, an author’s book, or a friend’s cancer treatment. It’s a popular tool that has grown even more popular the last few years. And, unfortunately, scammers have taken note.
Beware of Everything From Cancer-Treatment Donations to Shark Suits
One woman in Iowa used GoFundMe to raise donations for her daughter’s terminal cancer. Problem is, the little girl was perfectly healthy.
Another woman allegedly raised $26,000 on Kickstarter to fund her move from North Carolina to Massachusetts—the big problem there was she told donors she was raising the money for her yarn-dyeing business.
Even when a campaign is legit, donors should beware of some of the pitfalls that potentially surround crowdfunding.
Remember Katy Perry’s halftime show in 2015—the one featuring the infamous left shark? David Lam, the engineer behind an Indiegogo campaign related to left shark, told The Washington Times he wanted to use the popular meme for a good cause.
After the game, he sat down and worked on the details of the crowdfunding campaign. David wanted to make shark suits, sell them, and then donate the proceeds to an environmental nonprofit.
Because of the instant popularity of left shark, David’s campaign brought in 1,200 donors and nearly $93,000. The idea was a huge success, but the execution of the idea didn’t go as planned.
Unfortunately for David, the Halftime Shark Suit project was too much of a success. “We were thinking we’d make 100 [costumes],” David’s friend Eunyce Kim told The Washington Times. “And then it got really big.”
The campaign received attention from news outlets all over the world, and the requests for a left shark suit reached levels well past what David ever expected. Despite his best intentions, the campaign began to fail. Single-handedly, he couldn’t meet demand.
Frustrated donors believed he ran off with the money. They attacked him online, and the project began receiving bad publicity.
Eventually, David had to admit defeat with the campaign and start the process of refunding donors. But even then, donors wouldn’t receive all of their money back because Indiegogo keeps a small percentage of the funds raised.
How to Avoid Crowdfunding Scams
David Lam’s situation was different. He didn’t intentionally set out to scam people. But his case highlights the fact that, whether a crowdfunding campaign seems sketchy or not, you still need to critically look at any project you choose to donate to.
Whether a crowdfunding campaign seems sketchy or not, you still need to critically look at any project you choose to donate to.
Here are three guidelines:
- Research the creator of the campaign. Does their name appear in other scams? Are they claiming to do something that seems too difficult as a solo project? Or seems outside of their area of expertise? If anything you find raises a flag, that’s a good sign you should steer clear of that campaign.
- Ask yourself whether the project seems realistic. Several GoFundMe accounts have been set up, by a single individual, with the goal of fighting ISIS. Unless you’re Rambo, that’s probably not a good idea. Not only is the idea crazy—it’s also completely unrealistic. Say “no, thanks” to these crowdfunding campaigns.
- Don’t let emotion get the better of you. When it comes to need-based donations, make sure you can verify the truth of the claimed need. As in the case of the Iowa woman, some scammers are more than willing to fake illnesses and accidents to prey on kindhearted donors.
There’s nothing wrong with starting a crowdfunding campaign or donating to one. Many of these campaigns are perfectly honest, but a few greedy scammers have started to ruin it for everyone else. Do your research and make sure you’re comfortable before clicking “send” on your donation.
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You’ve heard the saying “buyer beware?” When it comes to crowdfunding campaigns, we have two words for you: donor beware!
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