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Crowdfunding websites have become major platforms for raising money for various causes, from the production of a local band’s first album to the payment of a cancer patient’s medical expenses. While websites like Kickstarter and GoFundMe have been instrumental in funding entrepreneurial products and post-tragedy relief efforts, they can also be a hub for scammers. Many great causes and projects may make you eager to donate, but make sure you proceed with caution when dealing with crowdfunding sites.

It is typically safer to give money to a crowdfunding site when you know the creator of the particular page, or are familiar with the cause. This way you know where the money is going and you have a method to contact the page directly if you have a concern.

If you receive an online request to donate to a crowdfunding page, but you are not familiar with the user or the cause, be suspicious. Make sure to research before giving any money or financial information. Consumer Reports warns of the following red flags that can indicate a scam:

  • Many sites provide a link to the user’s Facebook page. If he or she has a short, recently created timeline with very few “friends,” it could indicate a scammer.
  • If the user is trying to raise money on multiple different crowdfunding sites he could be trying to generate a lot of money quickly for himself rather than raising it for a real cause or product.
  • Many crowdfunding sites allow a comments section. Check comments from other users who have donated to the page and see if they have any reservations or warnings.

If you are donating to a page that is helping to fund the creation of a product, understand that the product might not develop. Make sure you read the page. Understand what the money is going towards and what happens if the product is never developed—do you get a refund? Do you get a free T-shirt? Do you lose your money?

If you are thinking about contributing to a crowdfunding page aimed at raising money for a charitable cause or following a tragic event, research to verify that the event actually happened, or that the cause is legitimate.

If you would like to donate to a cause, but you are nervous about giving money through a crowdfunding page, check to see if there is another charity organization collecting donations on a wider scale, such as the Red Cross, and donate through that organization if you feel more comfortable.

Don’t feel pressure to give money. Just because you receive a request to donate,  doesn’t mean you are obligated. If you are at all suspicious or nervous about donating through the site, don’t do it.

If you think you’ve been scammed through a crowdfunding website, report it to our office and file a complaint with the Federal Trade Commission or our state Attorney General’s Office. This past July, the Federal Trade Commission against the creator of a project for misleading contributors.  You should also report the scam to the website and comment on the user’s page so other consumers can be alerted to the scam as well.

If you have additional questions, contact the Office of Consumer Affairs and Business Regulation by calling our Consumer Hotline at (617) 973-8787, or toll-free in MA at (888) 283-3757, Monday through Friday, from 9 am-4:30 pm. Follow us on Facebook and Twitter, @Mass_Consumer. The Baker-Polito Administration’s Office of Consumer Affairs and Business Regulation is committed to protecting consumers through consumer advocacy and education.

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