Crowdfunding is all about faith and trust. Although it is difficult to trust people online, crowdfunding is about people believing in an idea and helping others succeed. But it does not mean that your trust will not be broken or you may not be cheated. And yes, it is not only about scams around campaigns, at times even imposters posing as backers cheat campaign founders.
We show you how some people are siphoning big amounts from the contributors and also how a contributor pledges money to projects for perks but never really donates to them.
If a successful campaign on one platform is attracting a significant interest from the community, you are sure to find similar campaigns posted on different platforms under different names. A great example of this was the Microcurrent Gold Campaign on KickStarter. As soon as it was apparent that this campaign was gaining heat, an imposter created a similar campaign on IndieGoGo. Fortunately, it was detected and deleted on time.
There was another campaign on KickStarter which reported about a similar fake campaign on IndieGoGo. The campaign founder eventually found out and warned people about it on his campaign page. Subsequently, the fake one was removed from the platform.
Thriving on scam
The biggest fraud in the history of KickStarter was the Kobe Red Beef Jerky. They claimed themselves as the world's first 100% beer fed red beef jerky. The founders had set a goal of $2,374 but the total amount pledged was well over $120,000. It was uncovered when the makers of 'KickStarted', a crowdfunded movie on KickStarter campaigns wrote to Magnus Fun Inc (founders of Kobe Red Beef) for an interview. After many weeks when nothing worked out they (‘KickStarted’ team) requested a small video interview with the founders. The founders said they would make a video and send it over, which they never did. They also updated the campaign page saying that they will be featured in the movie (though nothing of that sort had been promised). This is when the team got suspicious and decided to investigate. The campaign was cancelled hours before it could get over. KickStarter had deleted the campaign.
Beware of the backers too
A user named Encik Farhan pledged to hundreds of projects on KickStarter and received perks for those project. But later went back and retracted the charges on his credit card, thus leaving the founders in a soup.
Encik Farhan pledged $1000 to my campaign and filed a chargeback a few weeks ago, after I said I'd started shipping rewards.— Alex HeBRRRling ☃️ studiooo (@alexheberling) November 7, 2013
He has done this to DOZENS of creators, I wouldn't doubt that a majority of the projects he backed, he has filed chargebacks 2 months later.— Alex HeBRRRling ☃️ studiooo (@alexheberling) November 7, 2013
I am still waiting for the results of my appeal. Losing $1000 will ruin me if the credit card company sides with Encik Farhan.— Alex HeBRRRling ☃️ studiooo (@alexheberling) November 7, 2013
Alex was not the only one.
Here is an interesting list of KickStarter scams compiled by a reddit user.
Another interesting case of angry backers recently came out with the acquisition of Oculus VR, when their product Oculus Rift raised over 10x their goal on KickStarter and then got acquired by facebook. The acquisition made a lot of people angry, especially those who had contributed to the project and made sure it worked.
Before you post a campaign or contribute to one, make sure you have some basic checks in place. An easy but very important thing is to run a Google search on random sentences from the campaign article. If you are looking to go deeper then the best thing you can do is the reverse image search for the images on the campaign page and check if they are from any other crowdfunding site as well.
Small steps like these can go a long way when contributing to a project. After all, most projects are genuine and have a honest set of people behind them who are working hard to do some good.