Recent news brings us two reminders that crowdfunding is an amoral fundraising tool. It can be used for evil as well as for good.

Crowdfunding War

First, the New York Times reports that Russian nationalists are using crowdfunding to fund the rebellion/invasion in eastern Ukraine. One website even allows donors to direct contributions to specific militia units. The Russian separatists claim to have raised millions of dollars. (Of course, they have also claimed there’s no Russian government involvement in the rebellion, so take these claims with a grain of salt.)

Not much can be done about the groups themselves, which are located in Russia. But, as the Times points out, the payment intermediaries who help facilitate these payments are at legal risk.

Crowdfunding Fraud

Second, Inc. magazine reports that the Federal Trade Commission has taken action against a man who raised $122,000 on Kickstarter to produce a board game, then used the money to pay his rent and move. The man, Erick Chevalier, agreed to a settlement that orders him to repay the money, but the judgment has been suspended because he no longer has any money.

A copy of the FTC’s complaint is here. The agreed order is here. The FTC press release discussing the case is available here.

Considering the amount of money being raised through crowdfunding, it's surprising that there hasn't been more fraud. But this story is a reminder that fraud is a serious risk.