Yesterday, a post came up on Reddit describing a situation in which a current project on Kickstarter discovered someone had stolen their entire idea, including project assets, and created a campaign on Indiegogo. It’s scary situation for project creators and backers. This is why you should be researching everything relevant to the project you’re interested in to make sure you’re not being scammed.

The project in question was XY – Secure iOS/Android Bluetooth tracking tag. I sat down with the lead member of the XY team, Nick Trouw, so he could walk me through the project that attempted to scam XY, and how he got his wildly successful project back on track. Below, you can see his campaign on Kickstarter.

REAL XY campaign on Kickstarter

Below, you can see the scammer used all of the same assets including pictures and video, and reposted on Indiegogo.

FAKE XY campaign on Kickstarter

Trouw first noticed the fraudulent campaign after they began searching for anyone who may have written about their campaign or shared it on social media. Trouw told me, “An article about us came out the day before and we were searching for people talking about the campaign, but this Indiegogo campaign showed up under the search.” As a former project creator, this has to be a total nightmare. He’s in the home stretch of a successful campaign only to be ripped off.

“We saw the guy who copied our campaign, also had 2 other live campaigns that were copies of other Kickstarter projects.” Interestingly, both campaigns on Kickstarter had been completed. To clarify, this scammer began taking assets from completed campaigns and starting them on Indiegogo. You would think Indiegogo would catch on to someone running three campaigns at one time.

Trouw immediately contacted Indiegogo through their site. He used the a special violation form that specifically is used so people can notify when a fraudulent situation is happening.  He gave Indiegogo a brief description and various ways to contact him, Oddly enough, he still hasn’t heard from anyone at Indiegogo.

After waiting patiently and not hearing from them, Trouw turned to social media and Reddit to make some noise about the situation. He posted his complaints and concerns in the Kickstarter subreddit which can be viewed here, and quickly gained attention from fellow enthusiasts. Most redditors thanked him for identifying the scam and taking action.

Despite no contact from Indiegogo, shortly after the post on Reddit gained attention, Indiegogo removed all the campaigns from their site. Thankfully, none of the scammer projects had raised any money except for one $50 pledge on the fake XY campaign.

Lesson Learned: Whether you’re a project creator or potential backer, make sure you do adequate research. As a backer, you should be aware that any money you contribute to a project should be seen as an investment. Investments can be lost without proper research. As a project creator, it’s important to always be searching the web for places your project might come up. In the process you’ll find small blogs covering your project and in this case, potential fraud.

How Does This Fraud Keep Happening?

One has to wonder why Indiegogo keeps letting fraudulent projects into their system. A recent nightmare on Indiegogo has been the HealBe, first reported by James Robinson on Pando.com. The HealBe raised over $1mm all the while being reported as a scam. The device was a calorie counting watch which medical practitioners stated was impossible to create. Robinson did a far amount sleuthing only to find out that the team behind the HealBe was nonexistent prior to this campaign. On their Indiegogo campaign page they stated impressive big brand companies they had worked for which clearly gives a backer peace of mind. Yet further research by Robinson revealed this was not a match to any of their LinkedIn profiles.

Despite all the reports by Robinson on Pando Daily, Indiegogo has refused to remove the project. Indiegogo spokespeople have stated this project has passed all the necessary anti-fraud protections and will continue to be live. With 4 days remaining, HealBe has raised $1 mm.

The Future of Investment Crowdfunding on Indiegogo

It’s no secret that Indiegogo will be participating in investment crowdfunding once Title III of the Jobs ACT goes  into effect later this year. If they are having a hard time determining the difference between fraud and innovation, they will be not be well suited to deal with securities funding either. When fraud happens on that level, lawsuits will be handed out like candy on Halloween.Their laissez-faire attitude will not sit well with the SEC, FINRA, backers, or project owners.

Look out for the full interview with Nick Trouw of XY and how they raised $160K with 9 days remaining.