The short answer is yes, but it’s always wise to be cautious with your personal information and raised funds.
Crowdfunding is an established industry subject to oversight by the Federal Trade Commission (FTC). The FTC is committed to protecting consumers in the fast-moving market known as financial technology, or FinTech. We’ll look at essential security requirements you should look for like SSL connection and PCI Compliance.
1. SSL Connections: the first layer in your safety
SSL stands for Secure Sockets Layer. An SSL connection is created when an encrypted link is established between a web server and a browser. By establishing an SSL connection, the crowdfunding platform can ensure that the transmission of consumer’s personal data is encrypted and private. When you are processing private information like a credit card number, you will want to look for the little lock in the web address. That little lock means that you are using an SSL connection. You will also want to look for https in the address.
SSL-secured websites begin with https rather than http. Luckily, all the major crowdfunding platforms listed on our “Top Crowdfunding” chart use SSL connections.
2. PCI Compliance
We have all seen how the online marketplace has changed the way credit and debit cards are handled. When you think about how Amazon has moved so much of our shopping online, it’s no wonder that the need for cutting-edge online credit card safety measures has increased.
PCI compliance is a set of security standards designed to ensure that all companies that accept, store, process, or transmit credit card information maintain a highly secure environment. There are different level of certification, with the best being Level 1.
In order to achieve PCI compliance Level 1, an independent third-party audit must be scheduled. Only after an independent auditor signs off on the safety and security of the site can the site claim PCI Level 1.
In researching the various platforms, we only found two options that meet PCI Level 1 certification: GoFundMe and Facebook.
How can crowdfunding companies keep us safe by going the extra mile?
Beyond security standards, how do crowdfunding companies go the extra mile to make sure their customers are really safe? In this article, we’ll look into the safety standards that should be followed and the practices that crowdfunding companies have put in place to keep you safe.
3. Trust and Safety departments
Crowdfunding relies on your neighbors, friends, coworkers, and family. Given the close nature of these connections, crowdfunding also relies heavily on trust. On those grounds, some crowdfunding companies have devoted entire teams to the trust and safety of your personal information and your donations.
Trust and Safety departments are the crowdfunding community’s protectors. They are responsible for inventing and advancing technologies to keep people safe. Since most of the situations they see are complex, Trust and Safety departments have to rely on a variety of highly specialized skills to get the job done. From working with local law enforcement to contacting the Federal Bureau of Investigation (FBI), from handling small financial disagreements to tracking international money laundering, Trust and Safety departments are there to make sure the crowdfunding platform is safe for everyone.
Most smaller crowdfunding companies don’t have the resources to have an effective and proactive Trust and Safety team. So if this is important to you, we recommend you go with GoFundMe, YouCaring, or Facebook.
4. Fraud protection guarantees
Offering a guarantee is the next best way for a crowdfunding platform to show their community that they go the extra mile. The best example of this is the GoFundMe Guarantee Policy. Check out this link to see how GoFundMe is protecting campaign organizers, beneficiaries, and donors by offering a guarantee that they will be safe.
Another great example outside the crowdfunding space is Airbnb. Airbnb is an online marketplace and hospitality service. Basically, Airbnb allows you to rent out your home to people that are traveling or vacationing. This is an awesome opportunity for people to make extra money, but it doesn’t come without risk. That’s why Airbnb offers a $1,000,000 guarantee to give their community the peace of mind and safety they deserve. With this guarantee, people know that anything that may happen while they use Airbnb will be covered.
When doing your research on the safety of crowdfunding, make sure you look into whether companies offer guarantees and what their guarantee policies are.
5. Beneficiary safety concerns
You might be wondering what a beneficiary is, so let’s clear that up for you. A beneficiary is anyone that you are raising donations for—a friend, neighbor, coworker, stranger, or close family member. A beneficiary is the person who benefits from your fundraiser.
If you are raising funds for someone else, having the beneficiary directly connected to the campaign is one way to avoid any liability for the funds. One of the most common concerns with crowdfunding is the worry that the funds may be sent to the wrong place or end up in the wrong hands. Most crowdfunding efforts are safe and trustworthy, but having beneficiary systems in place ensures that campaign organizers have the option to make sure that the funds end up in the right place.
Look for crowdfunding platforms that offer a beneficiary system where you can send the beneficiary a direct invite to receive the funds. If you’re looking for an example, companies like GoFundMe offer the ability to directly connect your beneficiary to the campaign. By directly connecting the beneficiary, the beneficiary will have their name on the campaign, and they will be able to directly withdraw the donations. A beneficiary connection option adds a level of transparency and safety that donors seek out.
So, is crowdfunding safe?
Crowdfunding has the ability to make a huge impact on people’s lives. It has been used to rebuild homes after disasters, raise funds for expensive life-changing surgeries, help people who are homeless, and even send kids to schools that they otherwise couldn’t afford.
Crowdfunding does all of this through the power of people and the belief that people inherently want to help others. That being said, with this great power comes the great responsibility of keeping all of the people that use crowdfunding platforms safe.
While it’s a big challenge, we hope this article has shown you how FTC and PCI compliance has established a great starting point. We also hope you will look into the other ways that crowdfunding platforms are going above and beyond these standards to keep their communities safe. As we discussed, Trust and Safety Departments, Fraud Protection Guarantees, and Beneficiary Safety all play a crucial role in the overall integrity of a crowdfunding platform.