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How to spot crowdfunding scams before you donate

Posted at 11:45 AM, Nov 16, 2018

It was a feel-good story that captured hearts everywhere, but it turns out it was all a scam to get money.

A homeless man gave his last $20 to a woman stranded on a highway after she ran out of gas. To show their appreciation, the woman and her boyfriend started a GoFundMe page for the homeless man and raised more than $400,000. But in an unexpected twist, the couple and the homeless man are charged with making up the story in a scheme to get money.

“[This] highlights the promise and the peril of these sites,” says Anna Laitin, with Consumer Reports. “These incredible stories come out; people really touched by this and obviously wanted to help, wanted to give money. Now it's not clear the story was true.”

The website GoFraudMe tracks scams on personal crowdfunding sites and has found more than 200 cases in the past five years.

Consumer Reports admits it can be a challenge to know if you're giving to a legitimate cause.

“It’s really hard. You really have to read carefully and think,” Laitin says. “And maybe give to ones where you know the person personally or you know somebody who can vouch for it, because otherwise you can get caught up especially in these viral ones.”

Also, pay attention to how much money is needed and how much has already been donated. If somebody's asking for $10,000, and that's what they need, there's no reason to go far above that.

For more information on how to report fraud crowdfunding sources or to learn more about other crowdfunding cases, visit GoFraudMe.