The problem is that, with the internet,
EVERY CRIMINAL IN THE WORLD IS JUST ONE CLICK AWAY FROM YOU.
In other words, crowdfunding makes it impossible for you to do the normal kind of verification you would do if you met someone in your own town who pitched a new idea and investment at you. Every smooth talking scammer who can buy or hijack a website can appear to be 100% legit, thanks to the magic of the Interwebs.
You should think of crowdfunding as a form of gambling and, as with any gambling opportunity, don't invest money you can't afford to lose.
Avoid crowdfunding scams
May 6, 2019 by Lisa Lake, Consumer Education Specialist, FTC
Crowdfunding is one way to support a project you believe in and get rewards for that support. But the project you’re backing is only as good as the people behind it. Some dishonest people can take your money but produce nothing – no product, no project, and no reward.
Here’s how crowdfunding works: People called "creators" ask for small amounts of money from lots of people to fund projects through websites like Kickstarter or Indiegogo. In exchange, creators offer rewards to contributors, like a product that the creators are trying to make. Sounds great…unless the creators don’t create anything but profit for themselves.
In its lawsuit against iBackPack, the FTC says people shelled out over $800,000 via crowdfunding campaigns. The company said those funds would help it provide consumers with backpacks and shoulder bags with built-in batteries for charging mobile devices. But, according to the FTC, iBackPack’s claims that bags would soon be going out to consumers were lies. What’s more, the FTC’s investigation found that the money the creators took in from their campaigns generally didn’t go toward what they said it would. Instead, the FTC says, iBackPack’s CEO pocketed a large part of the funds for his own personal use. And when people began to complain, the CEO allegedly threatened some of them – adding that he knew their addresses and other personal information.
If you’re thinking about contributing to a crowdfunding campaign, take a minute to research the creator’s background and reviews before you pay. For example, has the creator engaged in previous campaigns? How did those campaigns turn out?
If you learn about a crowdfunding scam: