Crowd Funding Fraud Case Example
Is there any crowd funding fraud case that happened to any registered platforms? Well, there may be several cases already. One fraud case example was the one that happened in the said to be the biggest funding platform of today, Kickstarter.
It was said that ZionEyes project had successfully reached their target fund of $344,000 in the above mentioned platform. The project was about a high definition recording capable eyeglasses that is compatible with Facebook.
What made the project thought to be one crowd funding fraud was that none of its 2,106 backers did receive the promised item. A certain Mr. Joe Taylor and colleagues promised to deliver the item by winter of 2011. But came June 2012 there was still no eyeglasses delivered to any of its backers.
Yours truly has no information whatsoever if the so called crowd funding fraud ZionEyes project was able to deliver the promised item as of this date. Comments read online in the forums still associate the said project with crowd funding fraud.
What was said to be even worse with the said crowd funding fraud project was that the said platform washes its hands on the issue. But then, the said platform cannot be held liable for the rewards that are not met by its creators.
In other words, they are just merely a tool that creators can use to sell their ideas to investors. Any crowd funding fraud case that is out of the context of only serving as a portal to get projects funded cannot be held against them.
Is There Such A Thing As Crowd Funding Fraud Pyramid Scam?
If you will look closely how this new found way of raising venture capital works, you will notice that there is some slight resemblance to a pyramid scheme. However, it is similar as well with the matrix scheme. Does it mean that crowd funding fraud is either a pyramid or matrix scam?
To better understand crowd funding fraud and pyramid scam, let us talk on their similarity. The former is also called as multi level marketing. It is a multi level because one person will have to recruit another person to join the network in lieu of rewards. The rewards can be in monetary form or services.
The recruited person will have to recruit another person and so on in lieu of rewards. This system goes on and on. It is because it is only in recruiting another person that one can earn the rewards. There is no real investment involved.
Failing to recruit would mean no earnings even though time or money is invested to join the network. It shows why it is non-sustainable and a scam. Now, with crowd funding there is a chance that a project creator may run off with the raised funds leaving backers with nothing. So, it shows a non-sustainable system as well right? With that being said, isn’t crowd funding fraud a pyramid scam?
Do know that to get a project successfully funded the creator would have to invite as many people out there to fund/invest in his project. Now isn’t this part similar to that of a pyramid scheme?
Take for example what happened in the crowd funding fraud case example talked earlier. As the ZionEyes project was successfully funded it indicates that its creators was able to invite as many people out there to invest in the said project.
There was no real investment not even rewards said received by investors. Now, isn’t this one clear example of a pyramid scam? Does this indicate crowd funding fraud as pyramid scam? To reiterate, in crowd funding people is invited to fund a project in exchange of rewards. So, does it involve real investment?
Or, do you think the above mentioned crowd funding fraud case as more like a matrix business model? Do know that with the former people are being promised of rewards should they invest. People are promised of small tokens in exchange for a higher amount of fund.
From the sound of it alone, isn’t it obvious how non-sustainable is matrix scheme? But, what about people investing an amount that is too large for a small token/reward in crowd funding? Don’t you think of it as a crowd funding fraud? Is this new way of raising startup capital a matrix scam too?
Fraud is possible but the likelihood of smearing a name online is something creators would not want to do. The billion numbers of watchful eyes in social sites are a thing to be taken seriously. It will either make or break any name for life. Besides, in crowd funding we are dealing with small dollar/Euro investment. So, investors aren’t taking aback with crowd funding fraud. Creators, we are here help to you. Publish your pitch with us.
To crowd funding success!