Questionable Crowdfunding Campaigns May Be New Easy Money For Scammers (page 174587)
SAN FRANCISCO (CBS SF) — From politics to potato salad, even a trip to Mars, you can raise money for just about any product with crowdfunding, but those products don’t always make it into the hands of backers.
Zaid Yousuf tried it with the Pebble, one of the first smart watches, and got it at a discount.
It’s one of the perks of being an investor. So, when the Aclock came along he was in.
“It’s basically a smart watch for your nightstand, so I thought that is really cool,” he said.
Zaid invested $100 for two of the clocks on the crowdfunding site Tilt.com. But, things didn’t go so smoothly. There were contractor problems and shipping delays. “I started to be more anxious because I wanted my new toy,” he said.
Last November the campaign closed after raising $41,000, 117% of its goal, but still no Aclocks sent to backers. That’s when Zaid noticed something suspicious: The company running the Aclock campaign, called Hex3, was also running two others on a different crowdfunding site, Kickstarter. Thousands of investors were complaining that those campaigns too were not delivering. “By this point I pretty much knew I had been scammed,” he said.
The man behind Hex3: Jon Atherton, a reclusive Australian entrepreneur. So far he has not delivered on a single project. But he’s made out like a bandit, raising close to $300,000 in just a year with crowdfunding campaigns.
“That is a sizeable amount of money,” said Andrew Dix. Dix runs Crowdfund Insider, a website that tracks the crowdfunding industry. “Every day we get emails every day from people who are disgruntled they are upset, because they have committed funds to a crowdfunding project that has failed to deliver,” he said.
He says most times there’s no intentional fraud, but in this case: “If you see someone who has launched several campaigns and they have had several failures, I think that brings it into question and it raises a red flag,” said Dix.
Red flag or not, crowdfunding websites spell it out up front: When you lay down cash for a campaign, you’re on your own. It’s between you and the project creator. So good luck getting any help if you feel you’ve been scammed. “When I tried to find out where he was they wouldn’t tell me. I was shocked,” said Zaid.
We wanted to ask the CEO of Tilt, James Beshara, what he’s doing to protect his customers. But all we got was shown out the door. Zaid says he’s not surprised. “They they take a percentage off the money raised, so they don’t want to discourage potential investors,” he said. He sees it as a perfect scenario for a new kind of Nigerian scam. “If I were in the Cayman Islands I really think that I could come up with some sort of idea for a product, market it on Kickstarter or Tilt, and then take the money and enjoy it. It’s just too easy,” said Zaid.
Atherton may still be making money off unsuspecting investors, because Tilt is still linking the now closed Aclock campaign to Atherton’s company website, Hex3. We tried to contact Atherton on social media but never got a response.