Beware of crowd-funding scams

We’ve covered several crowd-funding projects in the past on the Clove Blog, so it only seems right that we post about the buyer risk that these sites can bring.

A recent post on Reddit brought to my attention the fact that scams, whilst not all that common at the moment, do happen from time to time on crowd-funding websites. In the past I’ve mainly come across projects that have already gained momentum and media coverage, so have had no reason to consider the legitimacy of the information presented, nor the fact that scam projects could slip through the vetting process that the websites themselves have in place.

The recent scam ‘project’ that i’m referring to on IndieGoGo was removed within 48 hours of it gaining attention over at r/Android – no doubt a fair few users reported it for being fraudulent. Without going into too much detail, the product being advertised was a clear scam; a smartphone offering technology that market leading manufacturers are nowhere near to producing. Naturally it gained no backing, but it does demonstrate how easy it can be for projects to be approved. This one was easy to spot because its proposals were so ludicrous, but one that sounds more reasonable by not being so ambitious in its offerings may not gain such widespread attention and could dupe a few early adopters.

Naturally, crowd-sourcing websites will want to do their best to keep scam products away, although the criteria for listing a product differs between each. Kickstarter has made its regulations stricter having had several projects fail on delivery and a new site called Christie Street, which hosts the Doorbot campaign that we covered earlier this month, has gone one step further when it comes to protecting buyers. Each proposed product must go through an audit conducted by the founder himself.

With better known websites tightening up on security, it will create the opportunity for new sites that are willing to relax their entry criteria a little. This approach will appeal to those that want to get their product listed on a crowd-funding site, but can’t meet the requirements of the likes of Kickstarter and Christie street. These sites will rely more on community policing than their own internal mechanisms and will still no doubt offer some great deals to the buyer, but will be more risky to shop on.

If you do plan to back a product on any site before it’s gained a good level of coverage, it’s always worth having a look into the background of its creators. If it’s a legitimate product they’ll be putting their name to it from the start and will have some proven credentials to put to their name. Even if a product has gained a few thousand in backing when you come to consider, that’s not to say that those already backing it have taken a cautious approach. Generally the communities built around crowd-sourced projects will be good at self-policing, but there will always be one or two scam projects that slip through the net.

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