Take Caution When Donating To A Business Venture BBB Receives Hundreds Of Crowdfunding Complaints

Many crowdfunding donors have recently been left in the dark because of shady business ventures. Crowdfunding is a method of raising money from multiple donors, typically via the internet. Charities and businesses often use crowdfunding websites to get a business or project off the ground. Since it’s often difficult to determine if a crowdfunding campaign is legitimate, Better Business Bureau Serving the Northwest advises consumers to be cautious before investing in a business venture.
BBB Northwest has received more than 100 crowdfunding complaints from victims about businesses collecting donations for projects. Recently, a Western Washington man was scammed out of $80 by a crowdfunding site when he decided to contribute to a business project. The project was underway, so he expected to receive updates. Instead, he received a message claiming the company is having “financial issues” involving a team member.

Before making any contributions to a business venture, make sure to follow these BBB tips:

• Look for current information: If the campaign fails to provide information on their website such as written updates, how contributions will be used or photos, it could be a risky investment. Also, check to see if the business is active and sharing current product information on social media such as LinkedIn and Facebook.

• Read the fine print: Sites need income to continue operating and many companies will take a small percentage of donations to cover expenses. Others may charge donors a fee. To give or receive funds, users will have to input personal information. Make sure to review the privacy policy as well as terms and conditions.

• Start with trust: Several crowdfunding sites are BBB accredited. Take the time to read reviews and company responses at bbb.org/northwest. Sites should also be secure; steer clear of entering payment or personal information on unsecured sites or public Wi-Fi.

• Check the records: Investors donating any amount of money want to know that it is not going to a money launderer and the person running the campaign exists. Check court documents and look for any bankruptcies or records of previous business operations.

• Don’t assume it’s deductible: Funding a project that is run by an individual or business instead of a charity may not be deductible as a charitable donation for federal income tax purposes.