Crowdfunding scams escalate with $100k fraud

Crowdfunding piggy bank. Stock photo by Getty Images

Another Canadian woman has joined the ever-growing rogues gallery of those faking illness to fraudulently grab some crowdfunding cash.

Police arrested Burlington, Ont., resident Cynthia Lynn Smith this week on charges that she faked a rare neurological disease to raise over $100,000 in charitable donations.

She’s charged with fraud over $5,000, which carries a maximum penalty of 14 years behind bars.

Smith is the latest in a parade of malingerers in this enduringly effective scam. Similar to when you refuse to donate $2 to charity ‘X’ at the supermarket cash register, it’s probably hard to refuse a small donation to someone (apparently) suffering from a terrible disease. And it takes a pretty cold-blooded donor to demand proof of illness.

Oddly, women appear to have been the main perpetrators of this sort of scam, or at least they have received the most attention. Another Ontario scammer, Ashley Kirilow, is possibly the most notorious (she even has her own Wikipedia page); she staged an elaborate chemotherapy masquerade to raise thousands of dollars, which she pocketed. Since then, other women in Ontario and Alberta have performed similar scams.

Kirilow’s campaign pre-dated online crowdfunding, which is making those scams easier than ever. Cynthia Smith used GoFundMe and — perhaps not coincidentally — raised more than these other fakers combined.

Crowdfunding frauds are ubiquitous these days. They’re easy to set up, hard for donors to vet, and there aren’t many legal barriers to prevent them. Scammers — ones who get caught, anyway — face charges, but the onus lies on donors to do their due diligence.

Crowdfunding sites say they do their best to weed out frauds, but they don’t catch them all, and they don’t offer refunds.

Indiegogo says it employs sophisticated algorithms to detect fraud, but warns users to exercise their own due diligence, noting: “We leave it up to you to make your own judgment about a campaign’s merits before making a contribution.”

Canada has few specific laws governing crowdfunding and most existing or nascent rules regulate corporate investment, not small-scale or charitable initiatives like covering a kitten’s medical bills or the highly successful campaign to raise money for the families of slain Canadian soldiers Patrice Vincent and Nathan Cirillo.

So there’s a definite “buyer beware” proviso for crowdfunded campaigns.

Find a Lawyer