DailyDirt: Avoid Crowdfunding Scams

from the urls-we-dig-up dept

Some crowdfunding projects are really impressive and have gotten a lot of attention and praise that is well deserved. However, there are also quite a few projects that haven't quite lived up to their promise. It's disappointing to say the least when a project gets over a million bucks and still fails to deliver a working product to its backers. Some backers get upset when their favorite crowdfunded project sells out to Facebook. How can companies like Kickstarter and Indiegogo and the like deal with these problems? There might be escrow schemes or insurance policies that could help, but in the end, it seems like buyer beware is the ultimate answer. Here are just a few links on this situation of dealing with crowdfunding disappointments and outright scams. If you'd like to read more awesome and interesting stuff, check out this unrelated (but not entirely random!) Techdirt post via StumbleUpon.

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  • identicon
    NO you are the Bomb, 15 Dec 2014 @ 5:49pm

    funding scams

    The shiaty thing is that real projects will get side lined and Ontario Securities Commission will allow only publicly traded companies to not pay tax as income, IE if you raise a million dollars and you are not a publicly traded company you pay as if it was your personal income...

    Another lets rig the game.

    reply to this | link to this | view in chronology ]

    • icon
      John Fenderson (profile), 16 Dec 2014 @ 9:39am

      Re: funding scams

      But surely you are allowed to deduct legitimate business expenses and losses, though, right? So in the end it wouldn't matter quite so much.

      reply to this | link to this | view in chronology ]

  • icon
    DB (profile), 15 Dec 2014 @ 8:03pm

    It seems that most Kickstarter campaigns are sketchy.

    Some are outright scams. Some are really just marketing operations, either for a product already made by someone else or for long-established companies that already have easy access to capital.

    The rest seem to be "give me money for my sideline hobby/business and I'll send you a T-shirt". Catering and cake baking are typical examples.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 16 Dec 2014 @ 1:03am

      Re:

      I can't comment more generally, since my interest in Kickstarter is limited to computer games, but for those games the impetus is for the developers to get funding outside of big publishers. Publishers tend to call the shots in any publisher/dev relationship, and are very risk averse in funding in general, leading to the situation we all know and love in Hollywood, where the same situation applies - sequelitis and bland cookie-cutter crap. Kickstarter allows devs to get the funding to create games that publishers won't fund. And that's what I want to see.

      It *generally* works pretty well, with the occasional failure (to be expected,) game turning out to be rubbish, or outright scam (Areal etc.) - I've backed a fair number of projects, and haven't had many issues. Only a single failure to finish, and Elite Dangerous' bait and switch (so far, touch wood.) Not a bad record.

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 15 Dec 2014 @ 10:26pm

    Those crazy Kickstarters are great fodder for sci-fi roleplaying, anyway. My next starship is definitely going to have a Reactionless Thermal Drive.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 16 Dec 2014 @ 2:26am

    As with the US stock market after the scandal-plagued freewheeling era of the 1920s, it's almost inevitable that, sooner or later, crowd-funding will be government regulated. Two reasons: First of all, it's extremely susceptible to abuse by scam artists and deceptions of all types. And perhaps most important, it tends to undercut big established companies in favor of tiny startups (though there's nothing to prevent big corporations from getting in the game by masquerading as small independents).

    Like anything else, the fact that crowd-funding (currently) works fine most of the time will tend to get over-ridden by the rare headline-grabbing exceptions. Hopefully crowd-funding won't follow the same rise and fall as hitch-hiking or Halloween trick-or-treating.

    reply to this | link to this | view in chronology ]


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