Crowdfunding scammers tug at heartstrings to trick victims: Internet Scambusters #1,013
Crowdfunding is a $17 billion a year business in the US -- a mouthwatering target for scammers.
They'll tug at your heartstrings with stories of war victims or people desperately needing money for healthcare.
You need to know how to spot them and what to do if it's a scam, as we explain in this week's issue.
Let's get started…
War and Healthcare Costs Drive Surge in Crowdfunding Scams
The war in Ukraine is fueling a huge rise in crowdfunding scams, robbing Americans and people who genuinely need help of millions of dollars.
Crowdfunding, which pools together donations from many people into a single cause, raises more than $17 billion a year in the US and is growing by up to a third annually. The US accounts for more than 40 percent of all global crowdfunding activity.
But the advent of disasters and emergencies like Ukraine, and prior to that, Covid, together with the boom in untraceable cybercurrency payments, has opened the floodgates for scammers.
They know they can tug on the heartstrings of ordinary folk eager to help those desperately in need.
Popular sites like GoFundMe, Kickstarter (mainly used for business projects), and Indiegogo, are doing all they can to spot and remove the crooks but they're fighting an overwhelming tide of scams.
At the same time, big names on the Internet, like Amazon and eBay, have also joined the crowdfunding fray by inviting customers to donate to charitable causes. Scammers have jumped onto this bandwagon by using names of legitimate organizations to imply they're backing a funding campaign.
Furthermore, it's now easier than ever to set up an individual crowdfunding site independent of the big players. Crooks can buy a perfectly legitimate software kit that does all the work for them.
And it's not just global calamities that lure unsuspecting kind-hearts. There's been a big uptick too in individual scams, or "scampaigns" as they've been called. They're mostly tricksters setting up dummy pages and sites for people affected by the soaring costs of medical care in the US.
People are easily moved by some of the stories that accompany individual campaigns.
A Better Business Bureau spokesman explained: "We see this a lot where people want to give and they see a story of a victim on a crowdfunding site and they think it's probably legit.
"Unfortunately, many of those crowdfunding sites can take days, even a week or two, to verify it's a real person. It may be a duplicated image or it might be a cloned person trying to get money and direct it to personal relief."
In a well-known case that attracted national publicity a couple of years ago, a man reportedly raised hundreds of thousands of dollars supposedly to help a homeless man who was allegedly complicit in the scam. He was jailed for two years last month.
One common trick is to hijack someone's Facebook page and then send a link to a phony crowdfunding appeal to all of their friends.
Crooks also follow the news, setting up multiple GoFundMe pages supposedly to help victims of an incident. It's not uncommon for scores of sites to appear within days of an incident.
How to Avoid Crowdfunding Scams
- Be cautious about donating to a friend's Facebook funding appeal. Check with them first.
- If an appeal uses photos, do a reverse image search to check that they're genuine. (We explained how to do this here: Is It Genuine? Check That Photo with Reverse Image Search.)
- Educate yourself. Check if the crowdfunding organization provides guidance on scams -- and read it. For example, GoFundMe offers help here: GoFundMe Trust & Safety.
- Beware of campaigns that ask for donations in cryptocurrency/cybercurrency. Payments are totally untraceable.
- If you don't know the individual or have never dealt with the charity, research their cause carefully. Have they been involved in other funding campaigns? What happened then?
- Read any small print in the funding blurb to discover, for example, whether all donations go directly to helping the individual or charity or whether a proportion pays for administration costs.
- Don't act impulsively. Think before you donate.
- Read the comments from other donors on the funding page. Be alert to warning signs from disgruntled givers.
- Don't assume that a site naming an individual in need of help necessarily has the victim's blessing or that your money will find its way to them. If it doesn't explicitly have their approval, don't give.
- If you want to donate to a disaster relief program, identify and research the organization behind it and, if you're satisfied it's genuine, donate directly to them.
If you suspect you're a victim of a crowdfunding scam, notify whichever platform it was on and tell the Federal Trade Commission.
This Week's Scam Alerts
No Room Service: You're staying at a hotel when a "room service" menu is popped under your door. The food looks good and reasonably priced, so you call the number and place an order using your debit card. In a recent well-publicized case, a traveler did just that only to discover the menu was not genuine and the supposed room service did not exist. The crook used the card number to drain $6,000 from the victim's account. Use the hotel directory or call the front desk if you want to order.
Not Amazon: A timely warning about using a customer service phone number from a web search. A shopper using Amazon's pickup locker service made a call after running into a problem when he tried to collect his purchases. The number he got on the web search belonged to a scammer. The phony rep told the customer to download a couple of apps onto his phone supposedly to help him access his locker. Instead, the crook accessed a cash app on the victim's phone and drained his account.
That's all for today -- we'll see you next week.