Beware of Phony Fundraisers on GoFundMe

And in greater Las Vegas, the self-described mother of three acknowledged online on Aug. 9 that she was not their biological mother. She said her partner is their father. As a result, some donors sought refunds under a GoFundMe guarantee. Overall contributions to the woman fell from $234,000 on the day she posted her update to $184,000 by Aug. 13.

When the Nevada woman's authenticity was called into question, a GoFundMe spokesperson said that the company followed standard practices and placed funds on hold until it obtained more information. GoFundMe then required the woman to post an online update and contacted donors to offer refunds, and it said it will return donations to those asking for their money back within a 14-day period. Afterward, “all funds will be used to cover living expenses and bills, and a dedicated amount will be put into an account for each child,” according to the spokesperson, who talked about GoFundMe but asked not to be identified by name. 

GoFundMe said it has “zero tolerance” for fraud. “It's important to restate our commitment to our community's safety, which we invest heavily in to ensure we are the most trusted online fundraising platform,” the spokesperson said, declining to quantify refunds in general. “Usage of the [donor] guarantee is very rare."

Fraud impacts fewer than one out of every 1,000 GoFundMe appeals, according to the spokesperson, who said about one-quarter of its 350-plus employees worldwide work on its Trust & Safety team.

The modern-day ‘Queen for a Day'

Boomers may recall Queen for a Day, a “sympathy show” that aired on TV from 1956 to 1964. Contestants described caring for a sick child or needing a hearing aid or a refrigerator, for example. Winners saw their dreams come true, descended a throne, and were crowned and given long-stemmed red roses.

That was then. Today, online charitable crowdfunding has showered money toward an array of needs, including more than $625 million raised on GoFundMe between March and August 2020 for pandemic-related hardships. More than 9 million donors supported those efforts. The site forwards donations to beneficiaries for needs including — but not limited to — health problems, disaster recovery, tuition, funerals and legal bills. In the last case, however, funds can't be used for crimes involving violence, terrorism, hate and other ills, according to the terms of service.

A survey released in April showed 91 percent of Americans were familiar with crowdfunding campaigns and 31 percent typically contribute to them. Donors to such fundraisers gave an average of $189 in 2019, most often to support a relative or close friend (52 percent) and charitable organizations (47 percent). The survey was conducted by Indiana University's Lilly Family School of Philanthropy.

Only the rare GoFundMe campaign goes viral, other research has shown. While such successes trigger publicity, so does greed. In June, a Florida woman was sentenced to prison for setting up a GoFundMe campaign ostensibly for relatives of the victims of a triple murder in 2020, The Ledger newspaper, of Lakeland, Florida, reported. Afterward, she went on shopping sprees, paid a utility bill and sent herself funds via PayPal. GoFundMe said it took down that campaign last year and gave refunds to all donors. The sentencing judge ordered the woman to repay GoFundMe $11,500.

AARP fields GoFundMe fraud reports

AARP's Fraud Watch Network helpline (877-908-3360) also hears from people who report being defrauded by bad actors on the site:

• A Pennsylvania man, who had just lost his 30-year-old nephew, said that his name had been used by a stranger to supposedly collect money for the funeral. He said he did not establish the page — which is no longer online — and did not have access to any donations.
• A Maryland woman said that after her daughter died, the deceased's aunt started a GoFundMe page, allegedly for expenses, “but took the money for herself."

The two should alert GoFundMe to investigate further, its spokesperson said.

GoFundMe said it keeps 2.9 percent of contributions, plus 30 cents per donation, as a transaction fee; remaining dollars go to beneficiaries. Donors also may offer a tip to GoFundMe in a show of support.

At the University of Washington Bothell, Nora Kenworthy, 38, an associate professor in the School of Nursing and Health Studies, was among authors of a study that examined more than 175,000 COVID-19-related GoFundMe campaigns set up from January through July 2020. The authors found that 43 percent of the campaigns raised nothing and 90-plus percent did not reach their goals.

Pandemic crowdfunding raked in more money in high-income areas, according to the study, which found that among the top-earning campaigns tied to COVID-19 were relief for golf caddies in Los Angeles and employees of Le Bernardin restaurant in New York.

Kenworthy, who said GoFundMe and other crowdfunding sites are for-profits, notes there are many ways to help people in need without donating cash: dropping off a meal, helping to organize their medical bills or caring for a family member or pet.

Her advice to older Americans? Consider giving through crowdfunding if you know a fund's organizer or beneficiary. And remember, the old standby works: You can always write a check directly to the person in need.

Katherine Skiba covers scams and fraud for AARP. Previously she was a reporter with the Chicago Tribune, U.S. News & World Report, and the Milwaukee Journal Sentinel. She was a recipient of Harvard University's Nieman Fellowship and is the author of the book, Sister in the Band of Brothers: Embedded with the 101st Airborne in Iraq.