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Don't Get Caught in a Crowdfunding Scam


on 4/10/2019

Woman watching money fly out of her cell phoneThere never seems to be a shortage of scams that are out there just waiting to take our money.  One of the most recent trends in scamming is something called “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.

Acquiring the money you need for expensive medical treatments or in times of catastrophe, like a house fire, is as easy as sharing on Facebook. Even business owners are using crowdfunding to fund research and development. Today, if you need boatloads of money, you only need to appeal to a vast audience, let it go viral, and wait for the money to start rolling in. 

Good Cause or Scam?

Crowdfunding platforms like GoFundMe, Kickstarter and IndieGoGo are packed with eager would-be entrepreneurs and desperately needy individuals alike. But, they’re also packed with scammers.

For instance, an Iowa woman raised thousands of dollars on GoFundMe for her daughter’s terminal cancer—which would be heartwarming were it not for the fact that her daughter is perfectly healthy. 

In a second example, an American company called Triton claimed to have created a device enabling people to breathe underwater. The IndieGoGo page they set up to raise funds for production pulled in $850,000 in just a few days. Sounds inspiring until you realize their supposed invention is more like something out of a sci-fi movie. In reality, Triton fooled many people with an invention that only existed in their imagination. 

Another incident, that gained national attention, was a New Jersey couple that teamed up with a homeless veteran from Philadelphia to start a bogus GoFundMe page. The couple claimed the veteran had used his last $20 to buy gas for his wife when she was stranded on Interstate 95. It was the perfect feel-good story, with just enough “heart-string tugging” emotion to get people to part with their money—to the tune of $400,000, in fact.

Later, when the veteran accused the couple of withholding his money, the case went to court. Proceedings are currently ongoing, but authorities believe the campaign was a scam and that the couple allegedly burned through a whopping $350,000 of donated funds in just a few months. 

While some crowdfunding platforms will refund your money if a cause turns out to be a scam, most of them will keep a portion of it for themselves, so don’t plan to get back every penny if you get caught up in a scam. There’s also the possibility of a crowdfunding scam remaining undetected, allowing the scammers to live it up on everyone else’s hard earned cash. Even if your money does land back in your wallet, it’s never a good feeling to know you’ve been conned. 

Don’t let con artists out there ruin your charitable giving side. You should be able to share your money with any cause you believe in. Here are some tips to help ensure you’re chipping in for something genuine. 

How to Check a Campaign for Legitimacy 

Whether it’s a heartbreaking story or a brilliant business venture you want to support, you’ll first want to research the campaign’s creator. Google their name to see what the internet has to say about them. Also, look up their street address and phone number to verify they’re using their real name, and check whether they’ve started 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. Charity crowdfunding scams succeed by appealing to people’s giving nature, especially during moments of tragedy or illness. Take the time to study the campaign with pure logic. Does the story really make sense? If you still think it’s legitimate and everything seems to check out, you can choose to donate. Or, you can take your caution one step further by contacting the campaign’s creator and asking for verification of their cause. If they’re genuinely in need, they’ll gladly supply you with names of doctors or references. But if they sound hesitant, or refuse to answer your questions, opt out.

If you’re looking at a crowdfunding campaign for a new business idea, ask yourself if the project is realistic. There are currently several GoFundMe pages set up by individuals with the goal of fighting ISIS. Sounds good, until you realize how impossible it is for a single person to achieve such a goal. Lots of inventions or other business ideas also sound incredible until you realize they’re only possible in a fantasy world. Don’t help a business venture get off the ground until you can verify that it’s actually legitimate. 

A little due diligence will allow you to make an informed decision about donating to a cause you believe in.

 

© Genisys Credit Union and www.genisyscu.org, 2019.  Unauthorized use and/or duplication of this material without express and written permission from this site’s author and/or owner is strictly prohibited.  Excerpts and links may be used, provided that full and clear credit is given to Genisys Credit Union and www.genisyscu.org with appropriate and specific direction to the original content

SOURCES:

https://www.google.com/amp/s/www.nj.com/news/2019/01/inspired-by-viral-gofundme-fraud-this-nj-bill-would-mean-harsher-punishment-for-scammers.html%3FoutputType%3Damp

https://www.daveramsey.com/blog/how-to-avoid-crowdfunding-scams

https://www.google.com/amp/s/www.nbcnews.com/news/amp/ncna936941

http://www.cracked.com/blog/6-incredibly-obvious-crowdfunding-scams-people-fell-for/

 

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