This article explains how someone can avoid falling into crowd sourcing scams. As many have already pointed out, crowdfunding sites like kickstarter’s are filled with scammers.Other times, genuine companies engaged in crowdfunding may be unable to put their product to market due to practical concerns. In either situation, investors are left out to dry. This article tells potential investors what they should look out for when dealing with crowdsourcing. For example, complex ideas are often hard to bring to market. Investors should also research the people who run the company. People who are confident in their inventions usually provide some degree of personal information, and if you cannot figure anything out about the person asking for money, it should throw up a red flag. One should also check into the creator’s background, to make sure they are competent in the field. Investors should also check comment sections to see if the company is involved in fraud. Last, investors should consistently be checking in with the company, as silence is often a bad sign.
John, a very helpful list of tips to avoid potential scammers. On the same topic, I found this site: http://gofraudme.com/ which is a site that asks for tips from the public as to potential GoFundMe scams and frauds. It also provides resources for investors who believe they have been taken advantage of. The site even has a “GoFundMe Fraud Tracker” that displays confirmed fraudulent campaigns. Over 200 cases have been posted on the Fraud Tracker. The founder of GoFraudMe, Adrienne Gonzalez, said that funerals, medical bills, and other personal disasters are the most popular scams. Of note, Gonzalez stated that she is not against GoFundMe, as she “understands how the site can help people when it’s used responsibly, but [] wants people to understand the risks.”
John, very interesting article that shaped my view on crowdfunding. I think it is very important that people become more informed about the risks involved in crowdfunding. Personally, I see two major reasons why people often underestimate the risks associated with crowdfunding: First, the stories found about crowdfunding in the mainstream media are generally about the successful projects. I assume that, as a result, many people’s perception is biased towards over-optimism so that they become to believe that most crowdfunding projects (or, in fact, even the start-ups themselves) succeed, while the contrary is the case. Second, I assume that scammers on these websites face a relatively low risk of getting caught since most people invest and risk rather low sums of money. Therefore, for many victims the effort to get the money back––for example by taking legal action––is simply not worth the effort.