When a new project is to be supported but you lack the necessary funds, you can sell your idea on the internet, and if people find it appealing, they will support you in the form of a donation.
Crowdfunding first started in 1997, when a fan of the British rock band Marillion collected money in the form of donations through the internet. The campaign was to underwrite an entire U.S. tour collecting $60,000
Today, crowdfunding campaigns are quite common, and many gravitate towards them when they do not have the necessary funds to support their projects.
A musician seeking funding to record an album in a studio or a board game enthusiast seeking to expand the reach of their game You can even have the campaign to spread general awareness to the masses or even help someone financially for an expensive operation and follow-on medical expenses.
Crowdfunding has also been used in cryptocurrencies. Sotheby’s planned to auction off one of the 13 existing first copies of the US Constitution in November 2021, which began as a joke. ConstitutionDAO acquired money from more than 17,000 backers to buy one of the 13 existing constitution copies.
Several online crowdfunding platforms exist that are easily accessible to the general public. Platforms like GoFundMe, Indiegogo, and Kickstarter are a few that are popular with the masses around the globe.
There are several examples of how crowdfunding has helped society as a whole. However, many scammers will take advantage of someone’s misery to fill their pockets.
How are scams conducted under a crowdfunding campaign?
Under a false pretext, when someone tries to collect funds or financial assets, they are called “crowdfunding scams.”
Scammers will use popular crowdfunding platforms to entice their victims into donating financial assets. Since the masses are donating a small portion of their money, the money collected far exceeds the mentioned amount as more and more people are ready to help the cause. Thus, these scammers will end up making a lot of money by doing nothing.
These scams typically appear after a natural disaster when assisting a friend, helping someone with expensive medical bills, performing charity work for the elderly, or helping someone with education or food relief in third-world countries. These scammers will go to any length to entice the general public to open their wallets and donate money to a good cause.
Examples of recent scams in the name of crowdfunding
The number of scams committed through crowdfunding has steadily increased in recent years. Whether the disaster is man-made or natural, these scammers prey on their victims like vultures.
In June 2021, a high-rise condo collapsed in Surfside, Florida. As soon as the disaster struck, several GoFundMe campaigns cropped up in a matter of hours. Many came forward to support the victims of this tragedy. Then the government officials stepped in.
The government officials of Florida warned the general public that several scammers have found an easy way to fill their pockets under the guise of this tragedy.
They managed to pull down as many as 21 pages linked to this tragedy. Several other pages were still a mystery to these government officials. They were unsure if these pages were valid or not.
During the pandemic, there was a global lockdown. Many lost their livelihoods. It proved challenging for many to bring bread to the table. Many resorted to crowdfunding platforms to ask for help from their fellow countrymen. Many came forward to help them since it was the most humane thing to do.
Even in this situation, scammers swooped in like vultures and started collecting donations. The FBI intervened and warned the masses that several charity institutes are fake and that before donating to any, they should do research on the authenticity of that institute.
In 2022, when Russia invaded Ukraine, many came to her aid. Cryptocurrencies are easy to transfer, and many crypto holders transferred their holdings to provide aid to Ukraine to fuel her war machines.
Many scammers impersonated the Minister of Digital Transformation of Ukraine and stole several cryptocurrencies and NFTs that were meant for Ukraine. The National Police of Ukraine (NPU) pulled down several “Help Ukraine” fake campaign pages.
How can you avoid falling victim to such scams?
These telltale signs of crowdfunding scams will help you identify them.
Government Funded Campaign
If you get an alert or message on your social media platform about the government supporting crowdfunding, then it is best to go to that government’s official page to verify its authenticity.
When you come across someone in your community who is in desperate need, the best thing you can do is go to them and help them.
Cause for Campaign
Go online and check what the cause is and whether the money would go directly to the victim. If the transfer of funds is going through an intermediary, then it is not worth the cause, as you can be sure as hell that there are scammers behind it.
Reverse photo search.
when you find a gut-wrenching image of someone who needs immediate medical attention and requires money for recovery. Before you open your wallet, you should do a reverse photo search online.
Check charity institutes’ information.
Crowdfunding campaigns are supported by organizers; it is best to learn a bit about them before you donate your money.
It is best to understand how long the project will take to complete; if not, can you ask for a refund? If the work is in progress, then they need to provide all the information about it. It is best that you read through the terms and conditions before you support the cause.
It has been estimated that 30% of all crowdfunding activities are scams. The best way to tackle this problem is to get as much information as possible before donating money.