With reports of crowdfund investors being scammed in rewards-based campaigns, never receiving the product they pay for, is crowdfunding just getting a bad rap or is it really unsafe?

An article on Florida’s 10 News site explores whether alternative funding platforms like GoFundMe, CrowdRise and GiveForward protect investors enough and whether they’re actually a breeding ground for scammers.

The website spoke to Better Business Bureau about crowdfunding and says you should check whether the campaigns you’re funding are legitimate. After all, the beauty of crowdfunding is that almost anyone with a cause can launch a project on a crowdfunding site to raise funds for something they believe in.

Bryan Oglesby of the Better Business Bureau says: “You don’t know truly if the money is going to a need. Donating to a site, to an individual’s need is similar to walking on the street, seeing homeless person and handing them 20 dollars cash.”

One example the publication gives is the case of James Robertson who walks 21 days to work and back everyday. A campaign started up on GoFundMe to buy him a car to help him on his everyday struggle. But how can GoFundMe ensure Evan Leedy, who set up the campaign is legitimate and will ensure the $350,000 (£227,000) raised will actually go to the intended recipient?

It argues that although this particular campaign hasn’t been proven as a scam or otherwise, it’s sensible to be wary about the campaigns promoted on any platform.

GoFundMe responded to this with the following statement: “with millions of campaigns, it’s not feasible for GoFundMe to investigate claims stated by each campaign organizer … only donate to people you personally know and trust.”

Like with any investment, before contributing money to a campaign, investors should do their due diligence and ensure the campaign is legitimate, whether peer-to-peer fundraising, equity or rewards-based investment.

Despite Kickstarter announcing it is testing Perk Insurance to cover its investors if the advertised products never materialises, it’s also the responsibility of the investor to ensure the cause they are contributing to is likely to be real.

Image source: Jon Feinstein/Flickr