Avoid donating to a crowdfunding scam
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Crowdfunding is a way to raise funds online, person-to-person. The organizer can set up a crowdfunding campaign to help specific people or to help a larger group or cause. Crowdfunding campaigns can also have a business purpose, like raising money for a new invention or business project. The campaign organizers often ask for donations through social media posts or on crowdfunding sites.
In a crowdfunding campaign, the money goes to the campaign organizer, not directly to the people or the cause it’s set up to help. The organizer is expected to tell you the truth about what the money raised is for and how it will be used, but it’s up to them to deliver on that promise. Scammers and dishonest businesspeople can set up crowdfunding campaigns to raise money for themselves.
Report Scams
If you spot a crowdfunding scam, first report it to the crowdfunding platform. You may also want to let the social media platform know that you’ve spotted a scam on their network. Here are links to report to some of those companies:
Then, report the campaign organizer to
- ReportFraud.ftc.gov
- The attorney general of the state in which the campaign organizer lives if you know it, or where the business project is being developed, if the funds are raised for a business purpose
- If you spot a problem with a local charity listed on an online fundraising platform that serves your community, tell your state’s charities regulator.
Find out who's behind the crowdfunding request.
Crowdfunding To Helping People:
- If a friend posted, shared, or "liked" the request on social media, contact your friend offline. Ask what they know about the post.
- Do they know the person or group who'll get the money? If not, try finding out who the campaign organizer is and look them up online. The crowdfunding platform should tell you who the organizer is.
- If you can't find them online, or the details you find don't match what they're saying on the campaign page, be suspicious.
- Do a reverse image search of the photos used on the crowdfunding campaign page. See if the campaign images are associated with other names, or whether the details don't match what the crowdfunding campaign is saying.
- Do a reverse image search of the campaign organizer's social media profile picture, too. Scammers often use stolen photos and copy and paste other people's stories.
Crowdfunding For Business Projects Or Medical Treatments:
- Do your own vetting. Find out who the campaign organizer is, and look them up online. The crowdfunding platform should tell you who that is. Search for the organizer's name and the name of the project together with the words "complaint," "review," and "scam." See what you can find out.
- Ask the campaign organizer lots of questions. Have they launched other products successfully? Have they funded those projects using crowdfunding? Use what you find online to confirm the details.
- Find out what happens to your money if the project doesn't get off the ground. There's no guarantee that the crowdfunding campaign will be successful and the project completed. Would you get a refund in that case? What risks are involved?
- Confirm the production status. Having a 3D photo of the product doesn't mean that the product is finished. Ask for a production schedule, and be clear on the current stage of development. Some crowdfunding sites don't let fundraisers show 3D photos of the product on their websites because donors might mistake these for a finished product.
- Ask the campaign organizer if there is an actual prototype and if you can see it.
- Understand the purpose of the campaign. When you give to a business project or invention through a crowdfunding site, you're not buying the product. You're simply helping fund its production. Be clear about what the fundraising is for and if you're getting anything out of it.
- If the crowdfunding campaign is for medical treatments, don't assume those treatments have been tested and are safe. Some medical treatments that are promoted through crowdfunding are unproven and ineffective. Donors to crowdfunding campaigns for the development of medical treatments risk losing the money they donate. Chances are that the medical treatment won't work. People also can be misinformed about the safety of these unproven treatments and may face serious harm from trying them out.