Is crowdfunding a scam?


By Peter S. Cohan WALL & MAIN,

Every time a new buzz word comes along, it’s human nature for some to use it as an excuse to scam the public.

This comes to mind in considering a fairly recent buzzword — crowdfunding. That’s the word to describe when a company or individual puts a pitch on the Internet and waits for the money to pour in.

Sometimes, these crowdfunding events sound legitimate. Consider the case of Cassie Wessely, 19, of Third Lake, Ill. She used a crowdfunding platform called Go Fund Me to raise $40,000 for her tuition at Vanderbilt University within four days.

Ms. Wessely had a pitch for money that pulled at peoples’ heartstrings very effectively. According to Chicago’s ABC affiliate, she “successfully completed her freshman year at Vanderbilt University despite losing her mother to suicide three weeks before she went off to college and her father losing his job. In dire straits about how she was going to pay for her sophomore year after her financial aid was canceled, the biomedical engineering student got creative: ‘Please help me stay at Vanderbilt University.’ Her goal was $25,000 and 24 hours after sharing her story on the GoFundMe website, she reached it. Four days later, people [had] donated more than $40,000.”

In exchange for their generosity, Ms. Wessely will try to thank everyone who gave and she says she is “planning to pay it forward in her field of study in the medical community.”

In my view, Ms. Wessely’s family tragedies sound terrible, and I am heartened that people responded with such generosity. Nor can I see any reason to doubt the truth of her story — although I am not sure how donors were able to verify its truth before giving her their money.

Read More on  http://www.telegram.com/article/20140716/COLUMN70/307169656/1002/business

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