Back in 2014, a movie production company started by three friends successfully reached its $75k goal on Indiegogo. The company called FND films promised to create an action-comedy but went silent after the campaign instead. Backers were outraged and believed that the creators waisted the collected money on ungodly things that shouldn’t be named. However, here’s the twist: just 4 days ago FND films released their movie trailer for “It’s all good”: A movie about not making a movie, as the filmmakers cleverly point out.
Misleading backers in order to create ‘art’ is ethically questionable; in this case it all panned out well. Needless to say, this crazy stunt does raise a critical issue: crowdfunding is solely built on trust and is therefore perfect for fraud. In the past a network of family and friends could vouch for the credibility of the investment seeker, whereas today every stranger looking for funding is only as reliable as their promises.
The frightening thing is that these ‘scampaigns’ are easy to setup, literally anyone can create an account, setup a campaign page and accept donations without any background check from the crowdfunding platform and only very few scampaigns have been discovered. The federal trade commission isn’t yet able to identify one crowdfunding site as more prone to scams and fraud than another. They rely on consumer complaints as a barometer, but they’re not a good one-to-one measure of prevalence.
According to the Massolution crowdfunding report 2015, the global crowdfunding industry grew from $6.1 billion in 2013 to $34.4 billion in 2015. With this explosion crowdfunding is a platform that comes with huge promises, but big hurdles. It is not a guarantee for success even if the campaign is sincere. The campaign might lack momentum, media attention or even support from the platform. Especially during the Internet age we all live in, being so connected is a danger that we must all recognise.
Below are some tips to protect yourself from being scammed:
- Check the creator’s credentials. Check their Facebook page; check their friends, the comments. Basically check if this person is ‘real’.
- Dig into the creator’s business background. Did he or she launch other successful projects?
- Be suspicious. If the campaign is on different crowdfund platforms this might be an attempt to steal as much money from people as possible.
If you have ideas about how to protect yourself in this digital era feel free to share your thoughts.
Also, if you’re interested you can view the original campaign and official movie trailer of FND films here: https://www.indiegogo.com/projects/it-s-all-good-by-fnd-films#/
Other sources:
https://techcrunch.com/2016/10/01/yhbt-hand/
http://www.consumerreports.org/cro/money/crowdfunding-scam
http://www.gadgetreview.com/7-scamtastic-crowdfunding-campaigns
http://www.crowdfundinsider.com/2014/03/34255-crowdfunding-fraud-big-threat/
http://dazeinfo.com/2016/01/12/crowdfunding-industry-34-4-billion-surpass-vc-2016/
