CrowdFunding Scams

CrowdfundBeat NewsWire

A while ago, Kickstarter project Luci was discovered to be a scam, causing many backers to lose faith in crowdfunding products. In fact, this was not the first time that a project on Kickstarter has turned out to be a swindle. Last year, several gaming and food projects have also been discovered to be hoaxes, including Elementary, My Dear Holmes!Kobe Redand Holovision, which have all betrayed the trust of Kickstarter backers.

Although there exists a small group of black sheep who attempt to con people of their money by launching fraudulent crowdfunding projects, crowdfunding sites are still a place where many hopefuls fulfill their dreams and provide an insight into market demand. As such, the benefits that crowdfunding bring are undeniable.

Here are some tips to help you to avoid falling prey to the slick scams.

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Genuine campaigns feature pictures and videos of the actual products

In order to raise a big amount of money from backers, the originality or quality of the projects are not always key. Sometimes, touching videos or vivid pictures could instead be used to trigger the impulse of the backers. The effects in the video might be really cool, but what if the product just exists in the digital world?

In the case of Holovision, a Kickstarter campaign that promised real, life-size holograms, concept images leveraging the public’s misconceptions about holograms were used to mislead backers. According to Oliver Kreylos, the 3D computer graphics developer who examined the authenticity of the campaign, although the project design was theoretically feasible, the way Holovision’s technology was presented in the campaign was not.

“While there is an actual design for something called Holovision, and that design is theoretically feasible, and possibly even practical, the public’s impression of the product advertised on Kickstarter is decidedly not…it is definitely creating a false impression that might lead to very disappointed backers,” Mr Kreylos said.

Unusually high number of first-time backers

Many scam projects actually share a common feature – they all succeed in their funding. To allure more attention from the crowd, the project maker would create multiple user accounts–or hire people–to pump up the number of people backing the fake project.

This often creates the illusion that the project is popular and trustworthy, and attempts to spur genuine users into backing the campaign by tricking them into thinking that the early-bird offers are running out fast. Be sure to check out the profile of the campaign’s backers to verify the project’s authenticity.

Request your crowdfunding service provider to verify the project’s legitimacy

These days, it is becoming harder and harder to commit fraud on crowdfunding sites due to the need to verify credit card details and phone numbers before a project is launched on the crowdfunding platform. Crowdfunding service providers have also raised the standards for launching projects. However, despite the tightening of the rules, fraudsters will still find ways to exploit any gaps or vulnerabilities they can find, especially since no scammer has been taken to court so far.

If you have any doubts about the project, but you do not want to reveal it publicly or ruin the excitement for the crowd, relay your concerns to the crowdfunding service provider and let its team investigate into the legitimacy of the project. Be sure to raise your concerns early. History has shown that many fraudulent projects were suspended only hours before the due date of funding. Do not wait until it is too late!

More tips to keep your money safe from scammers in our next article. Stay tuned!

This story was translated by Dana Lin from HWTrek. The original story can be found here.

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