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Over $3.2 billion dollars has been successfully raised by projects on Kickstarter since it was founded almost a decade ago.

Pretty impressive.

Millions of those dollars have gone into the pockets of scam artists around the world.

Less impressive.

I’ve previously told the story of Nbition, an organized syndicate of scammers operating out of Hong Kong. But they’re not the only ones out there.

Here is a list of free tools and methods I use to avoid getting scammed on crowdfunding sites.

What are Crowdfunding Scams?

While the types of scams vary greatly, I will be focusing on product projects that you would find on sites Kickstarter and Indiegogo. Such as:

  • Creators who do not intend to bring their product to market
  • Creators who brand and sell products direct from factory

Projects that won’t be covered here are:

  • Creators who lack the experience complete the project
  • Creators who lack the funds to complete the project

Scammers learn and improve their methods every day, and this is by no means a foolproof guide, so please:

  • Never invest more than you are willing can afford to lose
  • listen to your gut—if it sounds too good it probably is

Tools and Methods to Avoid Crowdfunding Scams

United States Patent and Trademark Office (USPTO)

While there is a learning curve to searching through the USPTO database, it does not take a law degree to understand the basics. They have a number of guides on their site that show you the basics of performing a search.

I like patent searches for a number of reasons. First, if the creator references a patent that you cannot find, then what else might they be lying about? Second, if they have a patent it will likely have more information about the people behind the project. Lastly, if they have a truly new or unique product and do not have a patent on it, it is possible someone else would be able to produce and import the item first now that their project is public.

LinkenIn

The project should clearly display the major people involved in the project. Specifically, the people who came up with the idea and the people responsible for seeing it through. Find them on LinkedIn to verify what is written about them on the project. “Former Microsoft employee” probably sounds great for a new app, but what if they only worked there as a janitor for three months? This is about verifying information as well as evaluating if the creators have the experience to bring the project to market.

Alibaba and AliExpress

In our increasingly globalized world, anyone with a computer can order customized product from a factory in China or other East Asian countries. Big factories do a lot of product development work themselves, coming up with new technology and innovative products. If they cannot find buyers right away, sites like Alibaba and AliExpress are great avenues for them to reach possible distributors around the world. So before you pledge, check to make sure what your backing isn’t already readily available direct from factory.

You likely won’t find it by the exact name, but try searching generic phrases. There is was a popular project for Firestarter Survival Bracelet, a paracord bracelet with built in tools that a quick search showed were already available to import. There are other similar stories like Gravity weighted blanket and ASAP magnetic charging cable.

WHOIS Database

A real company shouldn’t have anything to hide. That goes for their website domain information as well. WHOIS shows domain ownership information, as well as the date it was purchased and created.

While there are legitimate reasons to hide domain ownership information, it definitely makes me skeptical when I see it from a stranger trying to gain my trust online. Even worse is if the personal information does not match the personal information on the project page. Also, was this domain purchased only days before the campaign started, or had it existed for a while beforehand?

Wayback Machine

The Internet Archive’s Wayback Machine catalogs virtually the entire internet. This can offer great insight into how long they have been around, or if there is anything suspicious that has changed with their website over time. One thing to note, the Wayback Machine does honor some requests not to be indexed, which is what I would do if I was a scammer, but Archive.is is a good alternative to Wayback Machine that does not honor those requests.

How to Use These Tools

There is no silver bullet in knowing if a project is legitimate or not. These should be used as guiding principles in evaluating a projects risk. If everything looks good after going through all of the above tools, then it is likely they have the intent to deliver what they promised. But compounding inconsistencies likely don’t speak well to the intentions of the creators.

For the technical side of projects, I have found the people in groups on Facebook, LinkedIn, and StackExchange great resources in evaluating the technical feasibility of products. Creators are crowdsourcing your funds, so don’t be afraid to crowdsource their information.


Also published on Medium.