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Fundraising Website Fraud: How to Do Good and Spot the Scams

Reading time: 3 Minutes

July 31st, 2020

Crowdfunding sites have become a popular tool for fundraising in the internet era. With the click of a button, you can contribute money to worthy causes, friends and family in need, or even a cool new product that hasn't yet been built. With the right pitch, a crowdfunding campaign can go viral on social media, showering the recipients with thousands, even millions, of dollars in donations.

But, where philanthropy and entrepreneurship goes, tricksters, unfortunately, often follow. With fundraising websites and platforms rising in popularity, separating real-deal campaigns from social media scams and fake fundraisers can be difficult. One of the most notorious fundraising scams happened in 2019, when a New Jersey couple concocted a heartwarming story about a local homeless man. They raised almost half a million dollars under the pretense of helping the man get off the streets—but ended up pocketing most of the money themselves, and ended up in court on federal conspiracy charges. In Hawaii, officials shut down fraudulent campaigns established after the fatal double police officer shooting in January 2020 that rocked the state.

But how do you spot the frauds? What makes a successful scam is the same thing that makes a successful authentic campaign: emotion. Tragedies such as the officer shooting, or the prospect of saving someone from a tough life on the streets, are stories that resonate and inspire people to open their wallets. Seeing past the story takes a little bit of savvy, but if you know what to look for, you'll be much better prepared to navigate the sometimes-murky waters of the internet crowdfunding space.

Here are some tips to keep in mind:

Use your common sense

As with anything else on the internet, a healthy sense of skepticism can go far. Pay attention to red flags, which can be as small as an atypical number of misspelled words in the campaign description, or slightly odd word usages and sentence structures. Over-the-top or exaggerated claims as to what the beneficiary will be able to buy with the money should also warrant further investigation.

Do Your Research

Asking questions and being curious is the first step to recognizing a scam, crowdfunding or not. A simple Google search can tell you a lot about the legitimacy of a campaign. If it's a start-up or future product launch that's purportedly currently in the research and development stage, try to find some evidence of the organizers' career history, previous work in the business or product development world, or LinkedIn presence. Look for double-dipping. If the organizers have multiple active campaigns for the same product or cause across different platforms, that can be a warning sign as well. And don't forget to read the comments on the campaign site! This is where other donors and contributors can voice concerns or enthusiasm.

Go the Established Route

If the situation allows, send your donation through established, recognized charities or fundraisers organized through official channels. The fallen Honolulu Police Department officers, for example, had a fund set up for their families through the State of Hawai'i Organization of Police Officers. When it comes to donating to the cause of fighting racial injustice, there are established non-profits with years of demonstrable experience fighting for justice that are accepting and distributing resources.

Or Get Personal

One benefit of acting at the grassroots level, of course, is that more of your money will probably go directly to the individual in need. If you are going to donate money directly to recipients, stick with campaigns in your area and immediate circle. Do you know these people? Are they a part of your community? Can you find a legitimate Facebook page (not one made only a few weeks ago!) for the organizers? Can you verify their story and do you see evidence of it in your community or neighborhood? Also, you may want to avoid using digital or mobile payment platforms to donate, as these don't offer the opportunity for refunds in the event of a mistake.

Read the Fine Print

Different fundraising websites have different rules, so knowing what exactly you're committing to when you donate means being informed about that particular platform's policies. Some crowdfunding sites, for example, award the money to organizers only when they meet their fundraising goal; others don't require it.

Also, think about what you want to know about who controls the money or campaign. One specialized fundraising website, designed to collect funds to cover funeral costs, is run by individuals in the funeral home industry. Whether that represents a conflict of interest to you or not, it's good to consider which questions you want to ask.

Crowdfunded fundraising campaigns can be a great way to accomplish good things in the world, whether it's supporting a nonprofit, helping someone in need or boosting an innovative product into the hands of consumers. Just make sure you take a few simple steps to ensure that your money is actually going where you think it is, and not disappearing into a scammer's wallet.

For more information on how to stay safe online, visit our security page.

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