A.G. Schneiderman Lawsuit Targets Alleged Fraudulent Posting On Popular Crowdfunding Website

News from Attorney General Eric T. Schneiderman

FOR IMMEDIATE RELEASE
July 13, 2016

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A.G. SCHNEIDERMAN LAWSUIT TARGETS ALLEGED FRAUDULENT POSTING ON POPULAR CROWDFUNDING WEBSITE 

Suit Alleges Binghamton-Area Woman Pocketed A Portion Of Proceeds Of Scholarship Fund Established In Name Of Deceased SUNY Brockport Student 

Schneiderman Offers Consumer Tips For Making Donations Via Crowdfunding Websites

NEW YORK – Attorney General Eric T. Schneiderman today announced that his office has filed a lawsuit against a Binghamton-area woman for allegedly pocketing a portion of proceeds raised via a GoFundMe.com charitable campaign. Meghan Terry, of Endicott, NY, began a GoFundMe fundraising campaign last year to raise money for a scholarship fund established in the name of Collin Murray, a Binghamton area resident who tragically died in 2015 while attending SUNY Brockport. The lawsuit alleges that Ms. Terry raised almost $2,600, after expenses, but only turned over $1,330 for the scholarship fund. 

“New Yorkers are charitable and generous people who pull together to help those in need,” said Attorney General Schneiderman. “When individuals take advantage of this giving spirit to defraud neighbors in need, my office will hold them accountable. New Yorkers should continue to support worthy charitable causes and follow a few basic tips to ensure donations are used as intended.”

Attorney General Schneiderman’s lawsuit aims to compel Ms. Terry to turn over the remaining $1,257.76 in donations to the Attorney General’s Office to disburse the funds for the intended charitable purpose. The lawsuit also aims to prohibit Ms. Terry from ever soliciting, receiving, holding, controlling, or managing charitable funds in the future. Ms. Terry would also be compelled to pay an additional $2,000 in costs to the Attorney General’s Office.

Crowdfunding is a growing avenue for both charitable and non-charitable giving that has eliminated barriers for both donors and those seeking donations. While most donors in New York State still use traditional methods for their charitable giving, the rapid growth in crowdfunding is changing how people think about giving and allows for direct peer-to-peer donating that differs from giving contributions to organizations. 

According to Forbes, there has been a 50% increase in crowdfunding in just the last few years, and the average crowdfunding donation in 2013 was $88. As consumers utilize this new platform for giving, there are important tips that can be followed to be informed and to stay safe.

Tips for Consumers 

There are many different crowdfunding platforms. Make sure you understand how the platform you are using works:

  • Use reputable, well-established websites with a known track record. Some crowdfunding websites vet projects and others do not. You should understand what the website requires from a campaign before it is posted.
  • Know what you are getting for your contribution. In some cases your contribution will be a donation, and in others it may entitle you to a product or a share of a company.
  • Know what protections the crowdfunding platform provides. In most cases, the platform will not reimburse you if a campaign fails to deliver what it promised.
  • Your first line of defense when donating is to check the terms and conditions of crowdfunding websites. There are several important questions you should ask when reviewing terms and conditions:
    • Is the website vouching for the credibility of the charitable cause?
    • Does the website check to see if funds raised are going towards the intended purpose stated on the website?
    • If I believe my donation did not go towards its intended purpose, what recourse do I have to get a refund?
  • Understand if there are any fees associated with each contribution and whether a crowdfunding website is retaining a portion of your contribution.
  • Don’t give out sensitive personal information such as a Social Security number or password to anyone who solicits a contribution from you. When donating online, make sure the website is secure and includes ‘https’ in the web address. Donating with a credit card provides more protection than a check while still offering a paper trail documenting the transaction.

Thoroughly research the project before contributing:

  • Be wary of campaigns with few details. Credible projects will have established web and social media presence, and offer regular updates.
  • Check the campaign creator’s social media accounts to confirm identities and real-world connections.
  • Many crowdfunding platforms will let you write to a project’s creator. Ask questions and review how the creator has responded to others.
  • Compare details with other campaigns for similar products. If it seems too good to be true, it usually is.

What to do if you believe you have been scammed:

If you believe you are the victim of a scam, please file a complaint with Attorney General Eric Schneiderman’s Office by calling the consumer helpline at 1-800-771-7755, e-mailing the Charities bureau at charities.bureau@ag.NY.gov or filing a complaint at www.ag.NY.gov.