With Online Donations and Crowdfunding on the Rise, Scams are Becoming More Prevalent, Too

It may be the age of crowdfunding (or online fundraisers), but authorities are warning people to give with care when they encounter these websites. The reason? Scams are on the rise.

Crowdfunding is used to raise money for a cause on the internet. Sites such as GoFundMe and KickStarter are popular choices, but others have also popped up recently.

And one non-profit crowdfunding site, Red Basket, based in Omaha, Neb., has found a way to combat these false claims, so users can focus on donating to legitimate causes instead.

Although Red Basket has seen legitimate stories recently, such as an Omaha resident with a rare form of cancer and an 11-year-old autistic girl in need of a service dog, the site also tries to protect themselves and users from causes that might not be real.

In Atlantic, Iowa, for instance, a mother of a five-year-old girl was arrested for soliciting money after claiming her daughter had cancer. However, after an examination, the girl turned out to be healthy.

In order to prevent situations such as these from occurring, Red Basket executives, in conjunction with the Better Business Bureau and the Nebraska Attorney General’s Office, have offered advice on how to avoid crowdfunding scams.

Part of it comes down to the crowdfunding sites themselves, says Colleen Maciejewski, president of Red Basket. Her site makes sure to verify any claims made by those seeking funds from others.

For example, medical hardships have to be proven with medical bills, doctors’ forms, and insurance explanations regarding benefits and medical treatments.

Those who seek help after natural disasters or accidents, like a family on Red Basket who lost everything after a house fire, are required to provide photos of the damage, a deed to the property or other proof of residence. Red Basket also asks for references from non-family members for those looking to crowdfund.

For users trying to stay safe and avoid getting taken advantage of, Maciejewski recommends only donating to causes that have personal ties. She says that most people on Red Basket only donate to family and friends, and only a handful of campaigns have gone viral.

Maciejewski also suggests running a story’s text through a search engine to make sure that it wasn’t taken from somewhere else on the web. Checking Snopes.com is also a good way to find out if something is a scam.

The Nebraska Attorney General’s Office has received just three reports of scams this year. Tessa Peters, mediation center supervisor in the office’s consumer protection division, warns users against giving to new or “look-alike” charities, even if they appear on other websites.

“Just because it’s on a social media site like Facebook or on a blog, don’t assume that this charity (or fund) has been vetted,” Peters says.

The BBB’s blog also has advice for avoiding crowdfunding scams. Above all, the organization warns against giving more than you can afford to lose, and they also tell users not to be too easily swayed by a heart-wrenching story. When in doubt, ask for more information is none is given.