N.C. Attorney General Roy Cooper has issued a warning about consumer risks in crowdfunding – “CROOKS EMBRACE CROWDFUNDING” – just as backers of the NC JOBS Act launch a final push for passage of a crowdfunding bill in the General Assembly.

Cooper posted the alert on Tuesday and linked to an in-depth report from the Better Business Bureau about what’s going on in the dark side of crowdfunding.

Added to a list of warnings about travel scams and disaster scams, Cooper wrote:

CROOKS EMBRACE CROWDFUNDING

“For years, scammers have exploited people’s sympathy by setting up fake charities supposedly to help those in need. But these heartless crooks now have a new way to divert donations to their own pockets.

“Crowdfunding takes places when someone sets up a way for people to make donations, usually online, for a cause such as helping someone cover hospital bills after an illness or accident. Although many of these efforts are legitimate, hosting websites like Kickstarter and GoFundMe don’t screen those who want to set up a fundraising operation.

“These campaigns can be started by people who make up a fake tragic story to swindle you out of your money. Or sometimes the tragic story is real, but the person raising the money is completely unknown to the victims and their families. North Carolina law requires that a charity get permission before fundraising in a person’s name.

“To avoid getting pulled into an illegitimate crowdfunded project, know who and what you’re really donating to before you donate.”

Wise Counsel

Is Cooper, a Democrat and a possible candidate for governor, playing politics with crowdfunding legislation that has been passed by the N.C. House (in bipartisan vote, by the way, last year) and could be voted on by the Senate before the current session ends?

Regardless, Cooper’s warnings is needed.

Just because entrepreneurs are avidly seeking sources for new funding doesn’t mean crooks aren’t waiting to take advantage of people who are too trusting.

In its report on crowdfunding and giving to charitable causes, BBB says:

“In Better Business Bureau experience, if there is motive and opportunity, fraud can occur no matter what the medium.

“Whether it is direct mail, telephone appeals, in-person solicitation, websites, emails and now crowdfunding, questionable activities can emerge.”

Before you join the crowdfunding rush, you might want to read the full BBB report. It’s online.