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The Darker Side Of "Crowdfunding" Websites

posted Nov 12, 2014, 12:45 AM by J Shaw   [ updated Nov 12, 2014, 12:46 AM ]
The holiday season is often known as the season of giving. But before you reach for your wallet or credit card to make a donation this year, you might want to do your homework, especially if you’re donating through an online “crowdfunding” website like or There could be a darker side to these seemingly charitable websites.


Six-year-old Kallie is reaching new heights every day. Though for Kallie, it’s an uphill battle.


“Kallie was diagnosed with brain cancer in July of 2013,” said Jessica Brovold, Kallie’s Mother.


Two surgeries later, Kallie is relearning how to do even the smallest things, from bending down to pick up a toy to making a fist.


“Now she’s walking and she’s talking, and she goes to kindergarten every day, and it’s amazing to look back a year and see how far she’s come,” said Brovold.


Kallie is regaining her strength. But life for her family has yet to return to normal.


“We’re through the worst of it, but it’s still every single day that we’re dealing with it,” said Brovold.


That means dealing with the expensive medical bills that have piled up in the past year. To help take some of the edge off those costs, a relative set up a GoFundMe account shortly after Kallie’s diagnosis. Today, Kallie’s GoFundMe page has raised nearly $17,000.


“It’s made a huge difference. It really is helpful to have a resource like that available, and it’s so easy for people to use,” said Brovold.


But there may be another, potentially harmful side to these types of websites. GoFundMe and other similar sites are part of the “crowdfunding” trend that has gained momentum in the past five years, raising millions of dollars for various causes.

“Like many other programs, when it raises that kind of money there can be concerns about is the money getting to where it needs to be,” said Marty Jackley, South Dakota Attorney General.


Earlier this year, an Iowa mother was caught faking her own daughter’s terminal illness, and creating a fake GoFundMe page to raise money.


In New York, a scammer was caught using a GoFundMe page and a stolen photo to raise so-called funeral funds for a little girl who had died weeks earlier. The site was immediately shut down and all donations were returned.


“It’s very upsetting to know that there are people out there who would actually go and do that,” said Brovold.


“We in the consumer division receive about 35,000 scam complaints a year. Many of those complaints pertain to things just like this,” said Jackley.


Jackley says South Dakota is one of just six states that does not regulate charities. But there is a way of catching scammers on these “crowdfunding” websites through the State’s Deceptive Practice Statute.


“If in fact it’s a crime and it’s a deceptive practice, providing misinformation or doing inappropriate things, if it’s under $1,000 it’s a misdemeanor offense. But if it’s over $1,000 and you’re able to aggregate or collect that together then it becomes a felony,” said Jackley.


Although the Attorney General’s Office has received complaints over these types of websites, nothing has led to any charges.


“If you’re going to give those moneys, spend the time and look carefully at those websites. If you’re going to give to an already recognized charity, maybe look at going directly to that charity,” said Jackley.


Jackley says sometimes these false pages can appear so real there’s no way of knowing whether they’re legitimate. That’s why he stresses the importance of using caution.


“If you’re going to be generous and you’re going to give, make sure you know who you’re giving to,” said Jackley.


For the few people that take advantage of “crowdfunding” websites, there are also thousands of families, like Kallie’s who do need the help.


“I mean these families that are on GoFundMe, a lot of them have gone through really terrible tragedies,” said Brovold.


Donating with caution will help make sure children like Kallie continue to grow.

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