Protect Your Investments From Crowdfunding Scams


We live in an age of constant innovation. Technological advances in many areas have helped give rise to a new generation that has built companies that are changing the faces of their industries. One of the most powerful and popular tools of this ‘startup age’ are crowdsourcing platforms where entrepreneurs in need of funding can show their product to the general public and help raise the funds they need. Arguably the post popular platform, Kickstarter, was founded in 2009. Since then, as more and more companies have found success through crowdsourcing, the practice has become increasingly more mainstream. One example of such a company is the Pebble E-Paper Watch, which, according to Forbes, raised over $10 million in less than two calendar months. Unfortunately however, crowdsourcing sites such as Kickstarter, Indiegogo, and GoFundMe have also provided a platform for scam artists.

Crowdfunding scams are not unique to these platforms. One notable example is the case of Triton, a company that made headlines when they launched a campaign on Indiegogo claiming the diving mask they were at work on featured a ‘gill component,’ that would allow divers to breathe underwater. News of such a product immediately raised suspicion in some circles; many were taken in by the intriguing promise as the science behind the product seemed to hold up – at least at first. It did not take long for a scientist to reveal the project was a scam, but by then the campaign had already raised over $80,000. 

Needless to say, these scams are problematic for a number of reasons. Not only do they make it all too easy for con artists to embezzle money from all manner of people, they simultaneously give crowdsourcing platforms a bad name and make it harder and harder for potential investors to trust the legitimate companies launching campaigns on these platforms. Thankfully, users are discovering more tricks for picking out crowdfunding platforms and there are even a few websites dedicated to exactly that purpose. One such site is, a platform that serves as a sort of watchdog for these platforms. It gives users a place to report Kickstarter campaigns they believe to be illegitimate and allows would-be investors to search for campaigns they are considering putting money toward and make sure there is no negative press or reasons to be skeptical of the company. According to the site, it has uncovered over $3 million in crowdfunding scams. 

There are other ways to spot a fake crowdfunding campaign. When looking over a crowdfunding page, a user should always note if there are photos of the founders or any personal information about them such as their background or where the idea for their company came from. If you cannot put a name or face to the company’s founder, it may be wise to do some research before giving it any money. Such was the case for a company called Magnus Fun that claimed to be producing a new type of Kobe beef jerky but failed to include any information about their founders or make any sort of pitch in their video.

Another thing to note is the product’s photos. If they look too much like stock photos plucked from a free photo website, it could very likely be because they are. Dropping the page’s photos into Google Images can quickly reveal if they have been used on other websites that have nothing to do with the company. It should also be noted, though, that a quick Google search on any crowdfunding campaign that catches your eye is never a bad idea. You cannot be too careful and it is not uncommon to find sites or articles calling out these pages as the scams they are. Investors who have been duped will often do what they can to make sure that others don’t fall into the same traps they did. It is also a good idea to search for a company’s social media profiles on popular sites. If a company does not have a Facebook page, for example, it is quite likely they are illegitimate. Simply having a Facebook page does not make a business legitimate, but if they feature no contact information such as a phone number or email address, that should also be a red flag. 

Those considering in investing in products such as technological devices should be sure to check review sites for unbiased perspectives from users. Of course, no crowdfunding campaign will feature poor user reviews but that does not mean that they don’t exist. While combing through such reviews, be sure the reviewer has stated they actually own the product, particularly if it is new to the market. Illegitimate companies using crowdfunding campaigns for scamming purposes will always oversell, but sometimes what makes their operation a scam is they fail to deliver. This is particularly common in early-stage companies. It is wise to do whatever proper vetting you deem appropriate. Consider the claims made in each campaign and do what you can to make sure each one is backed up either by data or by science.

There is no question that scam artists on crowdsourcing platforms are a problem that needs to be addressed. While many campaigns are safe and legitimate, those that are not still remain prevalent. They should be viewed with the same healthy skepticism that comes into play when a grinning stranger in a suit walks up to you on the street and asks if you’d like to “get rich quick.” Where there are people with open wallets, there will be scammers. While the crowdfunding platforms are doing what they can to prevent these scams from occurring, users should also do everything they can before investing in a campaign that they have any reservations about. Thankfully, this has never been easier. Search engines and social media channels are powerful tools that can make uncovering the truth behind fraudulent crowdsourcing operations easier than ever. Protecting ourselves as investors is necessary but very doable if the proper techniques are employed.