Indiegogo will use collection agencies to go after fraudsters

Indiegogo has updated its Terms of Use in an effort to protect itself and backers from crowdfund-and-run fraudsters. In a recent blog post, the website has revealed that it will start using third-party collections agencies to go after campaign owners who don't deliver on their promises and those who run off with their backers' money. Further, it has begun imposing stricter requirements on people who want to set up shop. The campaign owners' legal residence should now match their projects' address upon ID verification to prove that they're not impostors. Owners are now also required to provide frequent updates about their project's development and are not allowed to put up another if their previous campaign is still active.

Unfortunately, the crowdfunding website remains a bit too lax when it comes to the kind of projects it welcomes. Whereas Kickstarter campaigns are required to be able to show their backers a prototype, Indiegogo ones could get by with photo renders. "We often get asked about the feasibility of projects and, while we may not review every project, we will work with the campaign owner directly if we receive questions or concerns," the website's Head of Trust & Safety wrote in the post.

While crowdfunding gave rise to some very interesting tech projects such as Oculus and the now-Fitbit-owned Pebble, it also led to a load of scams, enough for the FTC to step in. Even Kickstarter, which makes sure its campaigns can show existing prototypes, has its own share of crowdfunding failures. One recent example is BioRing, which raised $750,000 on Indiegogo before being suspended due to a violation of the website's terms. According to Vocativ, the campaign owner only left $300,000 behind for refunds and hid the rest of the money in offshore accounts.