Tennessee’s Consumer Affairs Division Encourages Caution with Crowdfunding

NASHVILLE – The Tennessee Department of Commerce and Insurance’s (TDCI) Consumer Affairs Division wants to warn Tennesseans about crowdfunding cons and charitable solicitation scams as they become increasingly prevalent during the holiday season.

Crowdfunding involves individuals and businesses funding a project or venture by raising funds from numerous people, often via online platforms such as Kickstarter, Indiegogo, or GoFundMe. In return, they usually offer rewards—a sample of their product, a commemorative t-shirt, or digital downloads.

“In the past, a network of friends and family could vouch for the credibility of the fund seekers before contributing cash,” says TDCI Deputy Commissioner Bill Giannini. “But today’s ‘creators’ are only as reliable as their promises - and those promises don’t always deliver. It’s crucial to investigate before you invest.”

In May 2015, the Tennessee Secretary of State’s Office and the Tennessee Attorney General’s Office jointly filed a federal lawsuit with law enforcement and the Federal Trade Commission against four charity organizations who allegedly scammed more than $187 million from consumers throughout the country.

Before contributing to a nonprofit organization, the Division of Consumer Affairs encourages you to do your research. Visit sos.tn.gov/charitable to make sure the organization is registered with the Tennessee Division of Charitable Solicitations and Gaming. Pay close attention to the name of the nonprofit organization, as there are many with similar names.

If you have any questions about crowdfunding offerings, you can always contact the Tennessee Securities Division at 615-741-2947 or 1-800-863-9117.

For more consumer tips, visit www.tn.gov/consumer.

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