A Swede who created a $400K Indiegogo-scam | Hacker News Reader

A Swede who created a $400K Indiegogo-scam

breakit.se

149 pointsimartin2k77 comments

Indiegogo in particular is super sketchy, I did a campaign with them and they had an employee there contacting me and telling me all the shady stuff they can do to help me be successful and if that I can guarantee I'll raise x amount they'll do all these extra things like put it on the front page and in the newsletter and whatnot. They let you extend campaigns forever if you arne't about to hit your goal so you can keep saying "ending soon", then if you do hit your goal, instead of ending, they will let you keep it open to ride the momentum of that, or they will then let you up (or down) the goal and change the date so you can keep catching people who want to just be able to get it, or who want to pile on to a super successful project whose goal is now 1/10 of the original so it looks even more legit. You can also back your own stuff anonymously for as high as you want, so often you'll see campaigns with like $1MM and only like 20 backers and most are anonymous or not listed and you know obviously 20 people couldn't have legitimately backed for that much.

I can't recall a lot of the other stuff you could get away with, including have no proof of concepts and just using renders and being fully funded already and such, but I had to unsubscribe from their emails it was so disgusting. You can tell if you look at their site overtime which kinds of things just stay up forever or how they instantly are over the goal and whatnot. One item stayed up for like 8 months, constantly over the goal.

Funnily enough just this morning my inbox has this:

---

From: Indiegogo

Subject: Your Indiegogo Innovation Award

Hi there!

We're excited to inform you that your project is eligible to receive an Indiegogo Innovation Award this January!

To honor your crowdfunding achievements, we cordially invite you to reserve your award, available for pick-up at this year's Consumer Electronics Show in Las Vegas.

Our theme at this year's CES is "Indiegogo Means Business," and your campaign is proof that creative ideas indeed grow into successful businesses with Indiegogo. As only 100 entrepreneurs will receive this gift, we hope you enjoy it as much as the Indiegogo community has enjoyed your ingenious ideas.

Thank you for being a pivotal part of Indiegogo!

---

I have never run a campaign on Indiegogo.

Same here. It must have been sent out to everyone with an account.

Well, what do you expect? the more money you raise, the more money they earn. Kickstarter isn't better, they allow campaigns to put a staffpick logo in their description even though there was no staffer picking that campaign. They are both as scummy IMHO.

https://petapixel.com/2018/10/17/if-you-backed-a-meyer-optik...

They allowed the same business to run multiple campaigns concurrently, opening new ones when the old ones were not even fulfilled. Turns out these scammers were using new funds to fulfill old campaigns and since a ponzi scheme always collapses...

I could go on and on like this with Kickstarter.

I studied their business model a bit, and came to the conclusion that these businesses are actually B2B with the appearance of B2C. These are marketing platforms,selling marketing services to you, paid by fees and the client is you, the project creator, not the backer since they successfully claimed they have zero contractual obligations toward backers. But backers are still billed by Kickstarter, at no point the project creator issues a bill or is forced to issue one. This is extremely clever from a legal perspective and it is what sets them apart from ebay and likes. But what are backers billed for then? that's the most interesting question, they they are not billed for the good they "backed"...

This is fascinating. I, too, had a weird experience with Indiegogo.

I was raising funds for a project, it was going OK (not great but OK... I had two or three backers after a few days), it was climbing the ranks of active projects, and then suddenly it disappeared from the search results entirely. It wasn't a slow descent into irrelevance; it was sudden and total.

Multiple emails and phone calls to Indiegogo resulted in zero response from them. The project close, the funding was sent to me, and I had to manually refund my few backers because I couldn't possibly fulfill their expectation with so few supporters and so little money.

I suspected foul play but had no proof. Now I'm thinking this is much more wide spread than I ever realized.

Lesson learned.

“all the shady stuff ... things like put it on the front page and in the newsletter and whatnot.”

I really don’t get how you could consider them helping to promote popular campaigns shady. I mean it’s the very point of the entire platform, and how both they and their users and the backers of projects gain value.

All the stuff he describes after that does sound really shady to me, though. Yuck.

Especially the "you can anonymously back yourself for as much as you want". That sounds like fraud to me...

Never pledge on indiegogo, it's for scammers only. Kickstarter (for all it's warts) requires a working prototype to post on their site. IGG requires no such proof that you aren't selling vaporware. Also IGG shows total pledge numbers from IGG PLUS Kickstarter (and potentially other crowdfunding sites you might post to) so that their numbers look bigger.

Stop, Drop, & Retro has some really good YouTube videos calling out IGG/KS campaigns (focused on the retro gaming scene) and he does a decent job breaking it all down.

> Kickstarter (for all it's warts) requires a working prototype to post on their site

What do you mean by "working prototype"? I ran a successful software Kickstarter last year and all we had going in was a mockup (created in Keynote) of what the app would look like.

I expected that it would take hours/days after I "submitted for review" for the campaign to be approved, but it was instantaneously approved and went live.

I'm sorry, it apparently only applies to when the project is going to ship a physical item. https://www.kickstarter.com/rules/prototypes

Claiming either is great, but I have been scammed more on KS than Indigogo. Today I super weary of both, but I have and will back projects by people who I know or whose reputation I know though other channels. (OLKB, TinyFPGA, etc).

Another one in the long line of either over-promised or outright scams on Kickstarter/Indiegogo.

The oldest one I saw got almost this much funding and that was back in 2012! https://www.kickstarter.com/projects/zioneyez/eyeztm-by-zion...

Every time one of these projects fails to deliver, I'd guess that another set of people get put off crowdfunding.

Personally my approach has been never to back a project by a first time creator, unless I already know their work from elsewhere, doubly so if it's for a physical product.

SSE Student? One of the two SSE-programs is arguably the hardest program to get into in Sweden. Sometimes the Karolinska medical school has a higher entry requirement.

Graduating from there usually means you are set and don't need to scam anyone for a _very_ comfortable life.

Sometimes people don’t steal because they need to, but because they want to. It’s a puzzle, it’s a rush, it’s fun, and for some it’s their hobby.

Very comfortable might be nice.... but it sounds like this person got away without having to work and pulling in 400k and 800k in what were possibly laundered money.

That seems like what might be a more attractive thing to do / better pay off, without a lot of work.

One could say similar things about Stanford, and yet Theranos was created by a Stanford dropout.

Maybe he cheated to get in?

> Graduating

Yeah, that.

Opportunity, Rationalization and Motivation, but never explicitly Profit.

These campaign would never be successful without the copywriters on popular digital media promoting them because they are content farms looking for cheap "news".

Wired, CNET, and all these prominent outlets, when was the last time they issued a follow up when something turned out to be a scam? when did they ever put a disclaimer about the risk of crowdfunding in their article? and let's not even talk about the fact that they don't even state clearly that the product doesn't exist and they never even tried it. Without shills, scams can't be successful, they are the shills, literally by the definition of that word.

IndieGoGo is a haven for scammers. They have absolutely no interest in protecting you. Even if you point out that the scammer is actively scamming currently, they won't do anything.

> IndieGoGo is a haven for scammers. They have absolutely no interest in protecting you. Even if you point out that the scammer is actively scamming currently, they won't do anything.

They actually do protect their backers better than Kickstarter sometimes:

this ongoing scam on Kickstarter:

https://www.kickstarter.com/projects/stillalive/polygons-the...

the same project was actually closed by Indiegogo as the creator is a notorious scammer:

https://www.indiegogo.com/projects/polygons-the-flat-4-in-1-...

Kickstater doesn't protect anybody at all. Kickstarter doesn't get involved in anyway after funds change hands and they take their cut.

It's a shame that's a scam, it's actually kind of a cool idea.

Crowd-funding is a scammers dream come true in general. Never "donate" money unless you are ok with the possibility of never getting anything in return.

I wonder if he's the same Swede behind this attempted scam - http://www.redferret.net/?p=55945

Waiting to pay for a product until it actually exists won't kill you.

It will, metaphorically, if a lack of funding will kill the product (or prevent it from ever being made). Crowdfunding is a financing option, complete with the part where the financiers are exposed to risk.

It's a rubbish financing option. The financers on average don't seem very good at comparing their little upside to the risk they're taking.

The ones I hear talking about their sponsoring, is that they know full well. I hear phrasing such as "shooting some money their way in case they succeed" and "it's an interesting project, let's hope for the best".

Exactly. I back crowdfunding product campaigns occasionally and I just assume that 10-20% of them won't work out even if they raise the money

It's pretty damn stupid, know it or not.

Why? It’s effectively a patronage; a model which has been used to bankroll artists, pet projects, and a number of risky ideas throughout history.

It's effectively investment, but without any of the benefits.

There is often very little risk... a small amount of disposable income to potentially get an interesting niche product. It is not meant to be a "smart" money decision. Not sure where you are getting that idea from...

Right, but if I just wait a year (or however long) I can usually go buy that niche product without the risk. It's a pre-order.

If you are talking about kickstarter and the like, no, there is a very real chance you will not be able to buy it if you don't fund it. There is also a very real chance that you won't get it even if you do fund it. And if it doesn't get funded in the first place, there is zero chance. Unless you were referring to some other sort of funding process.

FWIW I do not participate in kickstarter, but that is because I like having things I spend money on. I know plenty of people who do. So, I think it's in general a good service.

My $100 (or whatever) isn't likely to be the difference between something being funded or not; if it's going to be funded anyway, I might as well let some other guy put up the money, and I'll buy the product when it's available generally.

Crowdfunders are exposed to risk, but they aren't going to profit. Real investment comes with the prospect of an actual upside for the investors, but if I can just buy the product later when it actually exists (crowdfunding discounts aside) why not just do that?

"My $100 (or whatever) isn't likely to be the difference between something being funded or not; "

It absolutely will.

I have a very close acquaintaince in the process of doing hardware (and I have experience with this myself).

Getting the first production run is brutally difficult, and the operating captiol requirement just doesn't exist.

VC's don't want to pay for it, and neither do business development banks.

Though I think there is a lot of scamming ... 'hardware is hard'. Really hard.

I actually believe a lot of it is 1/2 way - they raise money with good intentions, but then are just stupid and lazy in getting production up, and then can't afford it. Once a team has 1 million - if they get production up, maybe they get 100K in profit. But if they 'fail' to get production up ... they can keep maybe $700 in 'profit' i.e. what they didn't spend on units.

Maybe a better solution would be to have escrow and pay on delivery, with partial payments or something like that.

You're entirely correct. I have not, however, seen anything so critical that the world would suffer if it did not come to fruition. We're no worse off if that smart water bottle never gets made. The environment might even be better for it.

You could say this about anything though, so it's not very damning criticism of Kickstarter. Also applies to Hacker News and everything, individually, at the grocery store. And all the Amazon boxes piling up on our doorstep from holiday deals.

Maybe you'd agree with that. I just never was a fan of the "oh, it's those people who are doing it wrong" as we ourselves indulge in a different set of the same thing.

Tell that to my Pebble Time 2...

> and raised in total $800.000 million from approximately 5,000 backers from around the world.

I assume this is a typo? Or did a blanket raise almost a billion dollars?

https://www.kickstarter.com/projects/322231573/zen-blanket-t... ==> SEK 4,149,969 or $460,4330 USD

https://www.indiegogo.com/projects/zen-blanket-the-blanket-f... ==>$806,268

so in total $1,266,728

You might have a typo: 460,4330?

yep, SEK 4,149,969 is USD 461,227.55 rounded up to 460,430

Your original message has a typo in it. There's an extra three in the USD value (460,4330 rather than 460,430).

If it was "moved" then that might mean the $460k are included in the $806k. Don't ask me how that "moving" could be done, but they explicitely said "move" and explicitely said that it collected $800k altogether. That would be surprising if it actually made the sum of both.

I heard that Indiegogo allows you to include funds raised on other platforms (at least Kickstarter) in your fundraising total.

I get a lot of ads on Instagram to products that lead you to Kickstarter/Indiegogo sites.. and they seem to always have 6-digit dollar amounts in backing. What I've read is, that's also fake, like asking your friend to bid on your auction on eBay, they just make a second account, pretend to back the product, and poof, "See, it's a popular product!".

Do the platforms get a percentage from each backing? If so, we can see why they don't care if the product is real or not...

Yes. Not sure about IGG but KS takes a 5% cut on funds raised.

They issued a correction:

>Update: A previous version of this article said the Zen blanket raised $1,2 millions, the amount they did raise was $800.000.

If you find the concept interesting, the same type of thing is available today at a lower price from e.g. https://curaofsweden.com/produkt/cura-pearl/ - no need to risk a Kickstarter order and delays.

What I've gathered from my own and others experiences: Just avoid Indiegogo and Kickstarter and buy the inevitable Chinese knockoffs if the item is successful. With this possibly unethical method, you might even get the item before the pledgees.

An article this long, and no mention of who it is? Feels strange to read this detailed investigation into the identity of “he who must not be named”, when the whole point of the article is the identity of the person.

-Norwegian here - the Scandinavian countries in general have _very_ strong laws protecting the privacy of all citizens.

A consequence of this is that defendants in criminal cases are very rarely named by the media until convicted, if even then.

In Sweden, this is not a consequence of any law, but by common journalistic practices. Media are protected by constitutional writings that extend very far in terms of the sender's rights to publish. However, Swedish media also has a long tradition of keeping themselves to de facto standards when it comes to things such as identifying individuals.

It would have been _very_ weird to see this person named on Breakit.

Especially since no real link has been made between both companies and the student. You can't even affirm that the IGG campaign was indeed a scam or just an utter failure.

At the same time, the law means that everyone's address in Sweden is public and published by various private companies online.

The Scandinavian concept of privacy is… interesting.

Yeah. It's pretty useful sometimes to know how to find people and things.

Indiegogo and Kickstarter are doing a very bad job at screening applicants.

At least something obviously physically impossible should've been cancelled.

They are burning their credit of trust.

I bought a product from Aliexpress (12 euro IoT wifi relay) which i later found in the exact same name and package on kickstarter for around 20 euros. I contacted kickstarter, who quite abruptly removed the kickstarter. If their only intentions were faul they would have let it be, but they actually did the right thing in this case. Just offering another perspective of their work.

Help me understand why the consumer protection is not used here?

In order to do card payments the merchant (IGG) need to be able to refund. It they cannot, the acquirer must do so. Anyways, one of the purposes of Visa and MasterCard is protection from these scams. If you don't get 100% of what you bought, you can get refunded by the card issuer, which will collect acquirer/merchant.

Maybe because the consumers are investing in a future product. It is not the same as buying directly online from ECommerce store like Amazon. Investing implies risk. The consumers can probably still get a refund for fraudulent charges from CC.

Unfortunately, back in 2014, I contributed to an Indiegogo campaign for DreamQii PlexiDrone 8 blade drone. It has not shipped, though they've been in a state of almost shipping for about two years. Lesson learned. DreamQii raised over US$2.2 million.

But when Canonical's Ubuntu Phone didn't meet its pledge people goal on Indiegogo people got their money back? How did this even happen? Not that this individual isn't to blame.

Unfortunately, back in 2014, I contributed to an Indiegogo campaign for DreamQii PlexiDrone 8 blade drone. Still not shipping. Almost shipping for the last two years. A costly lesson.

Aren't these platforms meant to protect against this kind of scam?

According to the FAQ question "Can Kickstarter refund the money if a project is unable to fulfill?" the answer is no.

[1] https://help.kickstarter.com/hc/en-us/articles/115005048173-...

How can you protect against such kind of scam on such kind of platform?

An airplane can reduce the risk of falling down, but if you want to be protected(!) against falling down from the sky you shouldn't enter a big piece of metal that lifts off from the ground.

Entering a piece of metal that can uplift you is a calculated and well-known statistical risk you can evaluate if it worth being taken for the service it provide.

Indiegogo seems to not have such statistical intelligence.

sending cash, to someone who can't at this time provide you the product you want to buy, and who makes no bones about not providing you with any assurances that they ever will is a calculated (and easily avoided) risk. You can evaluate if it is worth being taken for the product you may or may-not ever receive.

The fact that a house-fly already has the statistical intelligence for funding Indiegogo projects doesn't mean that there isn't any

Almost everything on indiegogo is a scam. Kickstarter is slightly better.

I wondered why the platforms can't help track down the creator, based on login information. Sure, you can cover your tracks, but I'd think they'd have the incentive to make it look like they're doing all they can to root out fraud/fraudsters.

The problem is where do you draw the line between "scam" and "wildly incompetent team fails to produce anything of value"

Big Mike, we are coming for you.

https://outline.com/xxPp9N

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