Insight: Fraud and rewards crowdfunding

June 27, 2017 • By TAB Content

There is a perception that crowd finance is vulnerable to fraud. But how much illicit activity actually goes on in rewards-based crowdfunding? 

GoFundMe has stated that less than one-tenth of one percent of all GoFundMe campaigns are fraudulent and pioneering research from Professor Douglas Cumming of York University’s Schulich School of Business seems to back this up. 

An exhaustive search of all fraud cases from 2010 through 2015 spanning 9 countries found that the fraud rate in the crowdfunding market is still very low. $2.5 billion has been pledged via Kickstarter to more than 110,000 successful projects and $0.8 billion has been raised for 275,000 projects on Indiegogo. Kickstarter had 197 fraudulent campaigns, and Indiegogo had only 10. 

These findings suggest that fraud is not a major problem in the rewards crowdfunding industry, despite the negative press that accompanies the occasional scam. 

Stay tuned in the coming weeks as Crowdsurfer takes a deep dive into Professor’s Cummings ground-breaking work.