Crowdfunding Scams: Common Schemes & How to Avoid Them
A crowdfunding scam is an attempt to collect money for a bogus cause.
These scams are designed to prey upon the empathy of large groups of people asking for money to help support them. People often send in small sums of money to support these causes. When multiple people do this, it can net a large amount of money for a con artist or bad actor.
Fundraising platforms like GoFundMe, Kickstarter, and Indiegogo have all been used in crowdfunding scams that have defrauded the general public. To protect yourself from being defrauded through a crowdfunding scam, do your research and your own vetting of the source.
Defining crowdfunding scams
Crowdfunding scams are when a crowdfunding campaign asks for and accepts donations through false pretenses, misleading people about the outcome, nature of the project, or cause being solicited for. Crowdfunding runs through channels that send money directly to the people asking for it, often on a very large scale through the use of the internet.
Crowdfunding is the collection of money, often small sums from large groups of people, to help someone in need. This can be done through social media platforms and specific crowdfunding sites like GoFundMe, Kickstarter, and Indiegogo. Crowdfunding is done for disaster relief, to help a neighbour or friend in need, for development or implementation of a project or product, or as aid for people impacted by a pandemic.
A crowdfunding scam is when a bad actor or con artist sets up a fake crowdfunding campaign to defraud people out of their money. Scammers pretend to be victims and seek to garner empathy and support in the form of monetary funds.
Crowdfunding scams can also be used to support projects and products that never actually come to fruition. Scammers regularly have no intention to deliver on their promises.
About 70 per cent of those giving to crowdfunding campaigns are actually helping someone in need. The other 30 percent are often putting money directly into the pockets of criminals.