Feds Take Action Against Crowdfunding Fraud

The Federal Trade Commission has landed hard on the Kickstarter crowdfunding platform. It may be just what the doctor ordered to protect people donating to odd and sundry products and companies pitched on Kickstarter, Indiegogo and others.

In the world of crowdfunding, the mechanisms of consumer protection are pretty thin. While crowdfunding platforms assert a commitment to integrity and ethics, it really boils down to caveat emptor. Kickstarter, for example, deploys an “integrity team [that] uses complex algorithms and automated tools to identify and investigate suspicious activity on projects,” but the real protector of integrity is the community of “backers” that, Kickstarter says, provide reports on what project creators are pitching and whether they are following through.