Crowdfunding Scam

Crowdfunding is the practice of funding a project or new idea or business by raising money from a large number of people. These days, it is often done through online platforms, such as Kickstarter, Indiegogo, GoFundMe, and YouCaring. “Organizers” will pitch a new product or creative project and submit it to the online platform. People can then fund it for rewards such as the product at a lower price or a special preview of the creative project (such as a movie). These crowdfunding sites can also be used to help people in need, such as raise money to pay for funeral or medical bills.

Online crowdfunding sites are not safe from fraud. Sometimes fake companies and scammers try to trick you out of money. However, more often you will lose your money because the organizers do not have the right experience or the challenges to the project are too big to overcome.

Tips on Evaluating Crowdfunding Campaigns

Here are a few tips on how to protect yourself when dealing with crowdfunding campaigns.

  • Research the Organizer. Learn all you can about the organizer before making a contribution. Use Google and LinkedIn to look up the organizer. Does the organizer have the expertise in the area the campaign concerns? Check out their Facebook page. Does it look fake? Are the friends real? Are there real-time comments? Be suspicious of pages that were created right before the campaign started.
  • Research the Crowdfunding Platforms. There are many different crowdfunding platforms and they all have different rules. Some platforms require organizers to have a prototype and only give the organizers money if the campaign reaches its goals and after the campaign is over. This gives people time to change their minds. Others do not require a prototype and allow organizers to take out money at any time, even if they do not reach their goals. If you want a refund, you have to get it from the organizer. Some platforms also provide refunds in certain situations (that is, when the organizer makes false statements or is charged with a crime).
  • Do a Reverse Image Search. Fake campaigns often copy and paste other people’s stories or photos. Doing a reverse image search of the photos used in the campaign, as well as those used on the organizer’s social media pages, can show you if the photos are stolen. Also, be careful if the campaign is posted on multiple sites. Scammers will do this to reach more people. A reverse image search may also show that the supposedly “new” product already exists and is being sold in another country like China through Alibaba.com.
  • Contact the Organizer and Ask Questions. Each crowdfunding site allows you to ask the organizer questions through the comments section. If an organizer is answering questions regularly, it is more likely that they are not trying to scam you.
  • Be Suspicious. Beware of campaigns that make you feel sorry for someone, but do not give you any details of how your money will be used. Be extra careful after a major disaster or tragedy because scammers will often try to take advantage of your desire to help victims. Also beware of campaigns that seem too good to be true. They probably are.
  • Understand the Purpose of Crowdfunding. Remember that there is no guarantee that the crowdfunded campaign will be successful. The purpose of crowdfunding is to fund a company or project, not to buy a product. There are risks involved. Similarly, when donating to a worthy cause, contributions are probably not tax deductible unless they are made to a nonprofit.

Classified Scams

What are classified scams?

Classified scams work in one of two ways:

#1 A scammer posing as a seller

Here, scammers post fake classified ads offering something for sale. This can be anything from a car to a caravan.

The item is usually priced at a very low price compared to other comparable items.

Normally, if you inquire about the item, the seller may tell you that you are unable to see the item (as they are away, for example) but someone else will deliver it for you after you have paid for it. After payment, you will not see the item or be able to contact the person who was selling it.

#2  A scammer posing as a buyer

If you are trying to sell something through a classified ad, you also need to be aware of classified scams involving fake buyers.

Sometimes, a scammer may ask you to pay for their transport, for example, so that they can come and collect your item and then never show up.

They may even promise that they will repay you the money when they see you.

Avoiding classified scams: Price too good to be true? Avoid it.

One of the ways that scammers lure buyers to purchase their products is by advertising them at a very low price tag.

If the item you have your eye on looks very cheap compared to other similar products, this should alert you that it may be a scam.

Big value item? Only pay after you have seen what you are buying.

If you are spending lots of money on something you have seen in a classified ad, it is always advisable to see the item, in person, first.

Do not be talked into paying a deposit before you have viewed it.

A simple way to avoid classified scams is to ensure that what you are buying actually exists, before paying any money for it.

Take someone with you to see an item.

Stay safe and bring someone else along with you to see the item.

If possible, arrange to meet the seller at their home. Be wary if they suggest they come to your home to make the sale.

Copy and paste the ad into Google.

If you are suspicious of a classified ad, copy and paste the text into Google. Often, scammers will use someone else’s description of the item to try and tempt buyers.

Equally, you could find other people who have been scammed by the same ad and are warning others to avoid it.

Check the seller’s ratings.

Many websites offer previous customers the possibility to rate their experience with a seller. If possible, take a look at what other people say about the seller you are thinking of buying from.

If you are selling your car, ask the buyer to bring ID.

If you have someone interested in buying your car, ask them to bring ID with them when they come to meet you.

This can help to put off a scammer.

Additionally, you need to be very aware if you let a buyer test drive your car. Do not leave the car keys in the ignition unattended or someone could drive away with your vehicle without paying.

The golden rule for avoiding classified scams: always be cautious.

Scammers are often very good at what they do. They know how to tempt us into parting with our cash.

In order to avoid classified scams, take the time to research what you are buying and who you are buying it from.

  • Avoid deals that are too good to be true.
  • Do not be talked into parting with cash to put a deposit down on a high-value item that you have not seen.
  • If possible, check if the seller has any ratings from previous customers.
  • Be aware that just because an ad looks slick and professional, it may not be genuine.
  • If you are selling something, do not be afraid to ask a potential buyer to bring ID with them to your meeting. This alone can be enough to put off scammers.

Finally, do not part with any cash unless you are 100% sure of exactly what you are buying and who you are buying it from.

Fake Check Scam

In a fake check scam, a person you don’t know asks you to deposit a check — sometimes for several thousand dollars, and usually for more than you are owed — and send some of the money back, to them or another person. The scammers always have a good story to explain the overpayment. They might say they’re stuck out of the country, they need you to cover taxes or fees, you’ll need to buy supply a fake check scam, a person you don’t know asks you to deposit a check — sometimes for several thousand dollars, and usually for more than you are owed — and send some of the money back, to them or another person. The scammers always have a good story to explain the overpayment. They might say they’re stuck out of the country, they need you to cover taxes or fees, you’ll need to buy supplies, or something else. lies, or something else.

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