Crowdfunding and fake fundraiser scams

What it is

A crowdfunding scam collects money directly from the public, through a donation-based site like GoFundMe or a reward-based site like Kickstarter or Indiegogo, for something that is not true. It comes in two forms.

The first is a fabricated personal crisis: an illness that was never diagnosed, a death that never happened, a hardship invented for sympathy. This is distinct from the charity scams covered elsewhere on this site, where the appeal is for a cause, a disaster or an organisation. Here, the person asking is also the person claiming to be in trouble, often soliciting their own friends, family and followers rather than strangers, and no charity, no disaster and no third-party beneficiary is involved at all.

The second is a fabricated product: a campaign that promises backers a physical reward, a gadget, a device, in exchange for money paid up front, then never delivers it. The FTC pursued exactly this against the creator of iBackPack, who raised more than $800,000 across four campaigns on Indiegogo and Kickstarter and, the agency alleged, spent most of it on himself rather than the product.

Both forms share the same structural weakness: a card payment reaches the organiser’s own bank account within days, with no charity registration, no escrow and no verification standing between the appeal and the money.

How it actually works

1. The appeal

   A fabricated personal crisis, or a product pitch with a prototype video and a specific shipping date, posted to a crowdfunding page with photographs and a story built to be shared.

2. No one checks the claim

   The platform does not verify what the campaign says. The FTC’s own consumer guidance states it plainly: some dishonest people can take your money and produce nothing, no product, no project and no reward.

   Where it could have stopped

   Checking the organiser’s own history, earlier campaigns and how they turned out, before paying, is the one verification step that exists. Nothing in a crowdfunding site’s signup or payment flow requires or even prompts a donor or backer to take it.

3. Money moves directly and instantly

   A card payment or bank transfer reaches the organiser’s own account within days, through the platform’s payment processor, with no charity registration, no escrow and no delivery guarantee in between.

4. Spent before anyone can check

   In the GoFundMe case on this page, the trio’s $400,000 was gone within about a month, spent on an RV, a BMW and casino trips. In the iBackPack case, the FTC alleged the money went largely to personal expenses and more marketing rather than the product.

5. The lie surfaces through behaviour, not paperwork

   A lawsuit from someone who was supposed to receive the money, a missed shipping deadline repeated for years, or a threat made against a complaining backer, not a background check, is usually what finally exposes it.

6. Enforcement splits into two tracks

   A fabricated personal crisis is prosecuted as wire fraud or bank fraud, a crime against the donors who were deceived. A fabricated product is pursued by the FTC as a deceptive and unfair trade practice, because a backer is legally a buyer expecting a product, not simply a donor.

7. A fraction back, years later, if at all

   Restitution in the criminal cases here matched close to the amount proven taken, $105,513 and $79,629 in two of them. In the civil case, the nearly $800,000 judgment was suspended entirely because the operator could not pay.

Why it works

The need, or the product, sounds completely ordinary. Real people get sick, lose homes and bury relatives, and real inventors successfully fund real products this way. A fabricated version of either does not have to clear a high bar of plausibility; it only has to look like the thousands of genuine campaigns next to it.

Closeness is a strength, not a safeguard. Both fake-illness cases here ran for years against the organiser’s own personal network, people who had every ordinary reason to trust someone they actually knew, rather than strangers who might have asked harder questions.

The platforms are built for speed, not verification. Payment processing exists to move money from donor to organiser as fast and as easily as possible. A verification step that slowed every one of millions of legitimate campaigns down would defeat the product’s entire purpose, which is also why the FTC’s own advice puts the burden of checking on the person deciding whether to give.

A viral story recruits its own audience. Local news coverage, shares and comments from people who have already given function as social proof for the next donor, the same mechanism that makes a legitimate appeal spread, with no way for a new donor to tell the difference.

And a product pitch borrows credibility from products that were real. Kickstarter and Indiegogo have funded genuinely successful devices, so a professional-looking video and a concrete shipping date read as ordinary ambition rather than a warning sign.

Where it comes from

Every documented case on this page is domestic: US organisers, raising money from a US audience, through US-based platforms.

There is no offshore network and no stolen-identity step. The organiser uses their own name, their own photograph and, in the personal-crisis cases, their own real medical appointments and forged medical paperwork to back the story. The fraud is in what is claimed, not in who is claiming it.

Scale ranges from a single viral campaign to years of ongoing solicitation. The GoFundMe case here ran for about a month before the money was gone; Amanda Riley’s fabricated cancer claim ran for seven years, 2012 to 2019, before an investigation caught it.

Enforcement runs through both criminal and civil channels, depending on what was faked. The three personal-crisis cases here were prosecuted criminally, for wire fraud or bank fraud. The one fabricated-product case was a civil FTC action under the FTC Act, because a backer who is promised a product and never receives one is legally a defrauded buyer, not a misled donor.

Real cases

Red flags

• A new account with no history running a single, high-stakes campaign with no other activity before or since.
• Photographs that appear elsewhere online attached to a different name or a different story, found with a simple reverse-image search.
• Pressure to give or back the campaign immediately, before a deadline the organiser controls and can always extend.
• A refusal of practical, non-monetary help, meals, rides, visits, in favour of cash only.
• Inconsistent details between the campaign page, social media posts and what the organiser says directly, about dates, diagnoses or progress.
• A product campaign with no working prototype shown on video, only renders or stock photography, and a creator with earlier campaigns that also missed their promises.
• Anger or threats in response to questions, rather than documentation, when a backer or donor asks where the money or the product actually is.

If it’s happening to you

Stop giving further, and keep every record you have: the campaign page, your payment confirmation, and any messages with the organiser.

1. If you donated on GoFundMe, you can file a Giving Guarantee claim within one year of your donation if the campaign misused the money or its stated purpose was false. GoFundMe investigates and decides the outcome, including any refund, at its own discretion; it excludes donations to your own fundraiser and anything given outside the platform.
2. If you backed a Kickstarter or Indiegogo project, know that neither platform guarantees a refund for a late or undelivered product; you accepted that risk under the platform’s own terms. A dispute with your card issuer is usually the more realistic path.
3. Dispute the charge with your card issuer if you paid by card and are still inside the chargeback window, often your fastest route to getting money back regardless of what the platform itself decides.
4. Report it to the FTC at ReportFraud.ftc.gov, and to local police if you believe a crime was committed, since the GoFundMe Giving Guarantee requires a police report from an intended beneficiary who never received funds. See where to report for other countries.
5. If you are the person a fundraiser named as the beneficiary and never received the money, file both a platform claim and a police report; the guarantee specifically covers this situation.
6. Before giving to any future campaign, spend five minutes checking the organiser’s history, earlier campaigns, and whether the photographs or story appear anywhere else under different details.

Where the money goes

Directly into the organiser’s own bank account, spent as ordinary personal money, with none of the layering or mule networks this site’s other pages describe.

There is no laundering chain here because none is needed: the money arrives already placed, through a legitimate card payment on a legitimate platform, into an account in the organiser’s own name. The $400,000 raised in the GoFundMe case here went to a recreational vehicle, a BMW and casino trips, ordinary purchases rather than concealment. The money the FTC says Douglas Monahan collected went largely to personal expenses and to marketing for raising more of the same.

That is also why recovery is so limited. There is no seized account, no frozen wallet and no shell company to unwind, only whatever the organiser has left by the time a court orders restitution or a settlement is reached, often years after the money was spent.

By the numbers

No published dataset breaks this scheme out as its own category yet, so there is no chart to show. The data page explains which agency categories exist and why some schemes are invisible in official statistics.