You don’t have to send money to a distressed Nigerian prince to fall victim to a scam.
And that, my friends, should scare the crap out of you.
Scammers are getting smarter. And, believe it or not, today’s fraudsters can fool even the most “woke” among us.
So pull up a chair, and adjust those reading glasses. You’re now on a crash course that will help you avoid nefarious crowdfunding shysters once and for all.
Just send us your social security number first.
Spotting a Crowdfunding Scam
1. This seems too good to be true.
In crowdfunding, as in life, TRUST. YOUR. GUT.
There are A TON of innovative projects on Kickstarter and Indiegogo that promise never before seen product benefits. The existence of these types of projects is what makes crowdfunding so cool.
But at the end of the day, if a product’s features seem completely out of this world, be very, very cautions before dropping your hard earned money on something that could potentially be fake.
2. You never see the product actually working.
This one’s especially important for technology projects. Make sure the campaign’s video actually shows the product performing the promised features.
If it doesn’t, the project creators may have taken a page out of Bernie Madoff’s playbook.
3. You find something very similar on Alibaba.
Alibaba, the Amazon of the East, literally has hundreds of thousands of products for sale at any given time. If it’s not on Alibaba, it probably doesn’t exist yet.
If you’re concerned that a Kickstarter or Indiegogo project is just a cheap clone, run a quick search on Alibaba.
You may be surprised by what shows up.
Creators Should Be Q&A Pros
4. The creators stop answering questions – or are vague in their answers.
This one’s subtle, but a shockingly accurate indicator of a crowdfunding scam.
As beginning entrepreneurs, who are often launching their first ever consumer product, project creators should be jumping through hoops to answer your questions.
If the reply area of the comment section is emptier than a Kmart parking lot, steer clear.
5. The campaign page has renderings or Photoshopped images.
If you see a campaign page filled with a bunch of artist’s renderings, and few actual images…
Well, to put it simply, that ain’t good.
6. There aren’t any campaign updates.
Legit campaigns should be posting updates about once a week.
There, they can answer frequently asked questions or showcase additional features of the product. If you see a big goose egg next to the “Updates” tab, run for the hills.
How to Avoid A Crowdfunding Scam
7. Check out the project’s Facebook page.
Apparently, there are people out there who have channeled their inner Liam Neeson, and devoted their entire lives to finding – and undoing – fake crowdfunding campaigns.
So if you’re running a fraudulent crowdfunding campaign, know this.
These vigilantes don’t know who you are.
They don’t know what you want.
But, they will find you and…
Leave dozens of comments on your Facebook page.
So if you’re a potential backer, look at the comments on the project’s Facebook posts.
If there are cries of a scam, more often than not, where there’s smoke there’s fire.
8. When in doubt, wait it out.
If there’s a really cool project that you want to back, but think may be a scam, wait until the final few days of the campaign to actually back it.
Granted, this goes against our advice of how to save money on crowdfunding campaigns because you’ll miss out on early bird specials, but the peace of mind may be worth it.
Why wait? Well Kickstarter’s been known to shut down projects mid-way through their campaign if they think it may be a scam. So if a project has survived until the end, it’s a safer bet that it’s legitimate.
You should now consider yourself prepared to spot the next big crowdfunding scam before anyone else does.
But before you go, a word of caution.
The vast majority of crowdfunding projects are completely legitimate. They represent hard working entrepreneur’s hopes and dreams of launching their own products.
So before you scream, “SCAM!” at the top of your lungs, step back for a moment. Do a little more research.
But always, always trust your gut.
Now if you’ll excuse us, there’s a wealthy prince who needs our help.