Experts warn of hidden dangers when using crowdfunding sites

Crowdfunding sites leave users vulnerable to scams, identity theft

More and more people who find themselves overwhelmed by unexpected medical and other expenses are turning to crowdfunding to raise much-needed money.

DETROIT – More and more people who find themselves overwhelmed by unexpected medical and other expenses are turning to crowdfunding to raise much-needed money.

These campaigns can provide a financial lifeline to those in need, but there are pros and cons to consider, whether you’re donating to one or considering setting up an account.

Jamilah Gordon will never forget the day in 2018 when she was told her teenage son, Matthew, had leukemia.

“You don't know what to think. I just remember I couldn't stand,” Gordon said.

Ciani Jerez was diagnosed with Hodgkin’s Lymphoma her sophomore year in high school.

“To be diagnosed at 15, hardly 15, was really, really rough,” Jerez said.

Jerez went into remission, only to return six months later, compounding the emotional hardship with a financial burden for her and her family.

“It was very, very difficult and a lot of us went through a lot of stress for a very long time,” Jerez said.

Both families turned to crowdfunding for help.

“It's so important for him getting better to know that everybody is rallying behind him,” Gordon said.

“It's definitely a lot easier now knowing with the fundraising that has gone on that we have some cushion to lean on,” Jerez said.

Kathy Cerminara, a law professor at Nova Southeastern University said we are seeing a growth of this kind of crowdfunding because people aren’t covered enough in our patchwork system.

“We see people who need to fill in the gaps number one, and we also see people much more aware of how social media can be used,” Cerminara said.

Unfortunately, Cerminara said, there are schemes -- people who engage in all kinds of activity to fraudulently to make up a person who is ill, to make up facts about a person people do know.

Melanie Duquesnel, president and CEO of the Eastern Michigan Better Business Bureau, said it’s best to make sure you’re donating to someone you know.

“Sadly, with the Nashville tornadoes, you may want to support them, but if you’re going to support them go to an American Red Cross or a United Way, someone who has boots on the ground where the disaster happened,” Duquesnel said.

She said during Hurricane Harvey in Houston in 2017, there were crowdfunding sites that had the same family picture looking very distraught with seven different portals of donations.

She said putting too much information could set someone up to be a victim of identity theft. Never include your last name, your age, your city or any banking information.

Duquesnel said to research to find the right crowdfunding site for you. She said make sure it’s reputable, secure and look up reviews. She also suggests talking with your bank to see if they have worked with that particular website.

Duquesnel also points out the money collected through a crowdfunding site is taxable. She said it’s free revenue similar to a paycheck and has to be reported to the IRS.

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