With Crowdfunding Scams on the Rise, Members Request Briefing from FTC to Ensure Proper Policies in Place to Prevent This Online Deception
WASHINGTON, DC – Today, Energy and Commerce Committee Chairman Greg Walden (R-OR), full committee Ranking Member Frank Pallone, Jr. (D-NJ), Oversight and Investigations Subcommittee Chairman Tim Murphy (R-PA), Oversight and Investigations Subcommittee Ranking Member Diana DeGette (D-CO), Digital Commerce and Consumer Protection Subcommittee Chairman Bob Latta (R-OH) and Digital Commerce and Consumer Protection Subcommittee Ranking Member Jan Schakowsky (D-IL), sent a letter to Maureen Ohlhausen, Acting Chairwoman of the Federal Trade Commission (FTC). In the letter, committee leaders express concern with the increase in crowdfunding scams – where consumers unknowingly donate to fraudulent charitable campaigns.
In today’s letter, members request a briefing from the FTC about its actions and policies to ensure that crowdfunding platforms are not used fraudulently or deceptively to solicit charitable donations.
“In 2015, crowdfunding websites raised an estimated total of $2 billion. While the majority of donations on crowdfunding platforms likely reach intended beneficiaries, it appears this is not always the case. For example, the Associated Press reviewed 30 out of 430 crowdfunding campaigns on GoFundMe.com intended for victims of the June 12, 2016, Orlando nightclub shooting. The review found that ‘most campaigns lacked key details, such as exactly what the donations would cover or even who was asking for them.’ Similarly, in 2012, before Hurricane Sandy even reached the United States, over 1,000 websites were created to support victims of the storm, including many questionable campaigns attempting to solicit donations while providing virtually no information about who was organizing the campaign or how the money would be spent. Additional news reports have highlighted numerous instances of fraudulent charitable crowdfunding campaigns, including a campaign organizer pocketing a portion of money raised to pay for a funeral, and another who raised thousands,” write Walden, Pallone, Murphy, DeGette, Latta. and Schakowsky.
The leaders continue, “The Committee seeks information about the FTC’s actions and policies for ensuring that crowdfunding platforms are not being used to fraudulently or deceptively solicit charitable contributions, and requests that the FTC provide Committee staff with a briefing on the matter. Please make arrangements to schedule this briefing no later than April 12, 2017.”
To read a copy of the letter online, click here.