Kickstarter Scams: When It Sounds Too Good to Be True

Kickstarter launched in 2009 as a helpful tool that lets creators crowdfund for their projects. Creators who don’t want or can’t find major backers can share their ideas on Kickstarter, and people who believe in the project can invest small amounts of money to fund its development. In return, they may receive the product when it is finally ready.

Kickstarter has produced some major success stories, such as the Cards Against Humanity game and the Peloton fitness platform.

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However, many projects have been unsuccessful, some failing to meet their funding goals, and some failing to realize their projects. But while it is inevitable that some Kickstarter projects will fail, some are actually designed to fail.

These fraudulent projects lure in investors with promises of products that are too good to be true, and then never deliver. According to Fortune, Kickstarter estimates that around 18% of funds go to fraudulent projects.

Crowdfunding Scams

Crowdfunding scams are simple. While big backers tend to research projects thoroughly and demand high levels of collateral before investing, small funders are less likely to do their due diligence. They may be interested in the project, but it doesn’t affect their bottom line, and they can afford to lose the money they invest.

While business investment scams have been around for centuries, platforms like Kickstarter unwittingly supercharge these scams as they offer the scammer a level of anonymity and give them access to a much larger audience.

Once scammers have their money, they may use all or part of it for purposes other than those promised or completely disappear without giving backers anything.

Major Kickstarter Scams

While there have no doubt been hundreds, if not thousands, of Kickstarter scams over the last 15 years, some stand out for the amount of money raised and the audacity of the proposed projects.

iBackpack promised a backpack that could charge electronic devices, had built-in Wi-Fi, a GPS tracker, and Bluetooth speakers, and was bulletproof for good measure. They raised around $800,000 and never produced a single backpack.
Fontus was a self-filling water bottle that could literally fill itself from thin air using the wind, the momentum of a bike, and solar energy. Despite being scientifically impossible, the project raised $345,000 and never produced a functioning prototype.
Lily Drone promised a drone that could be set to automatically follow and film its user, raising $34 million. It was later shown that their example footage was made using a GoPro.

How to Detect Kickstarter Scams

The risk associated with Kickstarter scams is not a reason not to invest. There are many excellent projects out there worth backing. However, backers should do a few simple things to ensure due diligence.

Inventions require inventors: Look for the technical people on the team and research their background to see that it aligns with their proposed work.
Creators are proud of their products: While not everyone loves the spotlight, creators are proud of their products and tend to be happy to talk about them publicly. Check how transparent the creator is with their identity and communication.

Products have competition: The nature of invention usually means that several people are looking to invent items with similar technology around the same time, so check out the competition. If the technology seems too good to be true compared to the rest of the market and the price is too low, then it probably is.

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