Dont be a victim of crowdfunding campaign fraud or scam - NEWS10 ABC: Albany, New York News, Weather, Sports

Dont be a victim of crowdfunding campaign fraud or scam

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For every honourable and honest campaign out there – there are others seeking to find underhanded ways to fleece individuals of their hard-earned savings.

According to a recent release, The Internet Crime Complaint Center (IC3) received its 3 millionth consumer Internet crime complaint. The 3 millionth complaint arrived on May 10, 2014 at 9:20 a.m. Clearly, only a fraction are related to crowd sourced funding, but the proliferation of scams online is telling.

Is there a way to be trusting and support fantastic, creative and compassionate ideas via crowd sourced funding campaigns without being ripped off by a scam? The short answer is yes – but do your homework first!

Fraud or Scam – Buyer Bewarem, Recognize it. Report it. Stop it. This has been the slogan of the Canadian Anti-fraud call centre for years. It rings truer today in all parts of the world with the rise of internet use and potential scams that abound. In May 2000 the USA-based IC3 initiated operations as a center to receive complaints of Internet crime. The complaints consist of a wide array of Internet scams touching victims of all nationalities, ages, backgrounds, educational levels, and socio-economic levels. In 2013 alone, the verifiable dollar loss of complaints submitted to the IC3 totaled nearly $800 million. The total dollar loss claimed from all complaints over the life of the IC3 exceeds $2 billion.

Fraud losses are very serious but the good news is that the majority can be prevented by identifying the methods used by fraudsters.

Crowdfunding is big business, a big deal, and having big impacts in the business world. There hundreds of legitimate crowdfunded campaigns running right now that can help a ‘mom and pop’ shop, or someone’s uncle or brother bring a product to market, expand their market – or even make the world more ‘green’. However, it pays to be cautious. While crowdfunded campaigns continue to grow – critical component in that growth is trust. By the end of this year it’s estimated that crowdfunding (collectively) will inject more than $65 billion into the global economy (source: estimates from crowdfunding platform Fundable.)

Recently – bloggers and social media and industry experts have been blowing the whistle big-time on questionable campaigns on both Indiegogo and Kickstarter. What should you do if you come across a campaign where something seems a little ‘off’? As with any other business transactions – faith needs to be backed up with some fact. If your ‘senses are tingling’ – you are usually right.

For the most part the individuals who launch a campaign are not evil. They are doing it out of passion, or the goodness of their hearts and the perks are paid out. Most campaign sites feature people who tell a story about their product with honesty and integrity and they have a genuine reason to believe in a successful outcome. Do some campaigns fail? Yes. Many do. Does that make them fraudulent? No. not usually.

There are clever ‘proprietary’ algorithms that weed through the information and spit out data. This helps. But, when it comes right down to it – human beings doing some ‘sleuthing’ and the mighty ‘word of mouth’ goes a long way in sorting out crowdsourcing campaign fact from fiction. Several recent fraudulent campaigns were discovered when hobbyists or enthusiasts noticed two different but strikingly similar campaigns running simultaneously on both Indiegogo and Kickstarter. Apart from being a ‘no-no’, this can be a tip that one or both campaigns are fraudulent.

How to Donate Smarter

PC World’s online article, “Kickstarter nightmares and how to prevent them” has good advice on separating real from phony campaigns: “Successful campaigns have lots of supporting information—including things like photos of prototypes and regular updates—proving that the project’s founders aren’t going to flake out or run off with the cash—whether due to incompetence or outright scam.” The USA’s Better Business Bureau has similar advice – The BBB encourages you to, “Look beyond the project profile page to learn about the entrepreneur; check Facebook and other social media sites; look for links that provide further verification.”

WAYS TO SPOT TROUBLE EARLY!

• Look out for campaigns with little or no real details
• Watch out for no links: credible campaigns have a Facebook or personal links
• Credible campaigns have a video on the campaign site (scams have no product to show)
• No updates? Not good!
• Look for lots of updates/pics as projects progress- before/after photos, new prototypes
• Look for ‘first person’ testimony (it may be cheesy but usually real)
• The more schematics, designs, drawings and details of an engineered product the better.
• Watch out for names that are a little too close to existing products or name droppers
• Ask questions – and get answers!
• Check with the experts in the field. Take your question or doubts to social media
• Have others in the ‘know’ heard of this person/technology concept?
• If it seems too good to be true– buyer be ware and trust your gut.
• If you think it may be fraud or scam – wait!

At the end of the day, the onus is on you to do some homework and basic fact checking before you write a big fat cheque (or… make that a big fat online transaction).

If you think a campaign is fraud, tell campaign site right away! To report suspected fraud / scam or find out more check out these links on Kickstarter and Indiegogo

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