Crowdfunding – A new cover for Fraud

Crowdfunding is a fantastic way to raise money. However this is not to say it’s not without its inherent risk. As with all other businesses where money is involved, there is always a risk of fraud and crowdfunding is certainly no exception to this rule. 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. It could be supporting a charity event, an author’s book, or a friend’s cancer treatment.
Such websites like Kickstarter, GoFundMe and YouCaring can be easily accessed by anyone anywhere and do not have advanced fraud controls, unfortunately fraudsters have taken note and capitalised on these loophole.

How can you avoid being a victim?

1. Research the creator of the campaign: A good way to begin is to check their social media accounts, Facebook and the likes. Have a look at the activity and the friends for the account. Is there a long history or was the account just recently created? Do the friends appear to be real? Also, can the creator be found on other social media networks?

Other consideration should be whether their name appear in other scams? Are they claiming to do something that seems too difficult as a solo project or is there anything you are unsure of? that could just be good sign for you to steer clear of that campaign.

2. Carry out your own due diligence: Just as your bank won’t issue you a loan without doing a background check, make sure you do the same before donating to any crowdfunding project. Make sure you can verify the truth of the claimed need. Is there any information you can find out about the project creator’s track record? Do you know some scammers are more than willing to fake illnesses and accidents to prey on kindhearted donors?

     While this list is not exhaustive, I would like to re-emphasize on  the importance of conducting your own due diligence as a means of mitigating any occurrences of fraud. It may take three hours, three days but it’s worth it in the end as prevention is definitely always better than seeking restitution after falling victim to a fraud.