How to avoid the bad apples in crowdfunding
March 28, 2019
Whether it’s an emergency surgery or an idea for an amazing new product, crowdfunding has changed the way we finance the more unexpected or ambitious events in our lives. But as with so many other things in life, a few bad apples can spoil it for the whole bunch.
For example, someone hacked into a Wisconsin girl’s Facebook account to set up a GoFundMe campaign that would benefit Jake Thomas Patterson, Jayme Closs’ kidnapper. The girl was receiving death threats and harassment for it, even though she had nothing to do with it.
And then there were the three people who scammed 14,000 people out of over $400,000. They claimed that one of them was a homeless vet who had given his last $20 to a woman who ran out of gas, so she started a GoFundMe campaign claiming she wanted to help him start a new life. But instead, the woman and her partner spent the money on luxury items and casino trips. (GoFundMe has since refunded the money to all 14,000 people who donated).
How to avoid becoming the victim of such a scam? Use your discretion and do a little homework. The Federal Trade Commission suggests only donating to people you know (and when you do, remember that donations aren’t tax deductible unless given to a 501c(3) nonprofit). If you do find yourself moved by a particular story, though, make sure you’re able to answer these questions by reading the campaign description:
How is the organizer related to the person receiving the donations?
How will the organizer get the money to the intended recipient?
Why did they start this campaign, and what specific things will they use the money for?
Are people you know making donations and leaving comments?
If you can’t answer all these questions, don’t abandon hope just yet. You can still contact the campaign organizer directly and ask questions.
If you have already been a victim of crowdfunding fraud, you have recourse. All crowdfunding platforms have fraud divisions, so be sure to report it to them.
Only a tiny fraction of crowdfunding campaigns are fraudulent, so if you keep your guard up and do a little research, you can still exercise your generous spirit by giving to causes that matter to you.
