In the wake of the Russian invasion of Ukraine, people are around the world are eagerly making donations to charities that are helping the people of Ukraine.  Unfortunately, scammers have been posing as charities and have tricked many people into giving their donations to these unscrupulous criminals.  For more information about how to determine if a charity providing aid to Ukraine is legitimate, check out this Scam of the day from February 27th. https://scamicide.com/2022/02/26/scam-of-the-day-february-27-2022-scammers-exploiting-invasion-of-ukraine/

In addition to charities, we are seeing appeals for donations to help the people of Ukraine on GoFundMe and other crowdfunding sites.  Crowdfunding is the name for  the process by which people raise funds on websites for various projects from movies and books to the development of new businesses and charitable purposes.  Unfortunately, as I have been warning you since 2012, the potential for crowdfunding scams is tremendous.  Last year in Texas, a five year old boy, Raymond Johnson died after a three year battle with cancer.  Incredibly vile criminals promptly set up a GoFundMe account to steal money from sympathetic donors seeking to help out Raymond Johnson’s family.  This illustrates the danger you face when donating funds through GoFundMe although by taking some precautions you can do so safely.  It is important to remember that crowdfunding sites are not charities and many of them take a percentage of your donation as a fee.

TIPS

The JOBS Act, a federal law that regulates crowdfunding was enacted in 2013, however it was only in March of 2015 that regulations were issued by the SEC to make the law effective.   At that time the FTC brought its first charges of operating a crowdfunding scam against Eric Chevalier who settled the claim against him.   Even with these new regulations in place, the primary burden of protecting your money in a crowd source donation falls to the individual donors  Check out the person or company online.  Find out if they are legitimate or a fraud.  Check with the Federal Trade Commission to see if there are complaints against them.  Do a Google search in which you merely add the word “scam” to their name or the name of the company and see what comes up.  Ask for detailed information from the person or company raising money through crowdfunding so you can understand the project.  Read the financial disclosures required to be filed by the SEC under the new JOBS Act regulations.

Never give to a project that you do not fully understand.  When it comes to investing in a business, an artistic endeavor or even a charity, it is critical to do your research about the people behind the particular venture before you consider sending  money.  Finally, unless the particular company raising money through crowdfunding is designated as a 501(c)(3) company by the IRS, you cannot deduct your contribution on your income tax return.  Also remember, that merely because a crowdfunding appeal appears on a legitimate crowdfunding website does not mean that the website vouches for its legitimacy.

One of the good aspects of GoFundMe is its guarantee that if scams are discovered, GoFundMe will refund all donations made to the scammers. Here is a link to GoFundMe’s guarantee. https://support.gofundme.com/hc/en-us/articles/203604704-The-GoFundMe-Guarantee

For those of you receiving the Scam of the day through an email, I just want to remind you that if you want to see the ever increasing list of Coronavirus scams go to the first page of the http://www.scamicide.com website and click on the tab at the top of the page that indicates “Coronavirus Scams.”  Scamicide was cited by the New York Times as one of three top sources for information about Coronavirus related scams.

If you are not a subscriber to Scamicide.com and would like to receive free daily emails with the Scam of the day, all you need to do is to go to the bottom of the initial page of http://www.scamicide.com and type in your email address on the tab that states “Sign up for this blog.”