New Jersey authorities are taking a closer look at websites that allow strangers to dig into their pockets for causes such as replacing a stolen wheelchair for a quadriplegic Idaho man and expanding an animal-rescue operation in Salem County after an apparent scam involving a New Jersey couple and a homeless Philadelphia man.
The state Attorney General's Office will "review its practices" regarding websites such as GoFundMe, which boasts that it has raised $5 billion for charitable causes since 2010, said Lisa Coryell, a spokeswoman for the office. The Attorney General's Office never has prosecuted any violations of charitable laws stemming from charitable solicitations on sites such as GoFundMe and GoGetFunding, Coryell said.
"Crowdfunding is relatively new and raises novel questions," she said in an email.
Coryell did not have any additional details of the review ordered by state Attorney General Gurbir Grewal. She said any charitable campaign in New Jersey, whether online or traditional, must rely on true statements and that any money raised must go toward the advertised charitable purpose.
Unwittingly, GoFundMeDonors bankrolled a BMW, vacations, a luxury handbag and sunglasses and a new iPhone for a Burlington County couple who had raised $400,000 on behalf of a homeless man who came to their aid, according to a lawyer for the good Samaritan. Police searched their home and took the BMW and other items, but the couple has not been criminally charged, according to the Burlington County prosecutor's office.
The highly publicized case highlights the possible perils of online crowdfunding for charitable causes, which has grown into a multi-billion-dollar enterprise this decade on the strength of personal stories like that of Johnny Bobbitt, the homeless man who gave $20 to Mark D'Amico and Katelyn McClure after they ran out of gas in Philadelphia last year. Attorneys for Bobbitt, D'Amico and McClure declined to comment or did not respond to messages. The couple said in earlier media interviews that they were concerned that Bobbitt would spend much of his windfall on drugs.
Crowdfunding sites have an advantage over traditional charities like the Salvation Army and the Red Cross: People can donate directly to individuals in need, like victims of flash flooding in Little Falls last month. There are photos and touching personal stories of average people befallen by tragedy. And the sites themselves get a relatively small cut of donations, unlike many brick-and-mortar charities with paid staffers.
But the sites can't verify each personal story, nor can government regulators force them to, said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy at Indiana University.
Cases like Bobbitt's are rare. They're also easier to catch, since the intended recipient can call out would-be benefactors who siphon off money for their own uses.
More common are cases in which people embellish their own sad narratives or invent one from whole cloth, although it's impossible to quantify how frequently those things happen, Osili said.
"We don't know how much fraud is taking place," she said. "The biggest gap is on he data side. It's hard to regulate without knowing what is going on."
Coryell said the consumer-affairs division of the state Attorney General's Office can oversee charitable fundraising by any charity that's either located in New Jersey or solicits funds from state residents. Given that crowdfunding sites can raise money from around the globe, the state's jurisdiction is expansive -- but the Consumer Affairs Division doesn't have the staff to police thousands of fundraising campaigns.
Representatives of GoFundMe and GoGetFunding said their sites do include safeguards against fraud.
The Bobbitt case is exceptional in that D'Amico and McClure had custody of the money intended for their homeless beneficiary, said Bartlett Jackson, a spokesman for GoFundMe. The normal procedure is for the funds to go directly to the person for whom the campaign was created, Jackson said in an emailed response to questions.
"Normally, the campaign organizer would never touch money, but in this unique situation the campaign organizer was permitted to withdraw the funds," he said. "Regardless, we have taken steps to prevent this extremely unique situation from occurring again."
In 2015, a friend of a Wisconsin family was accused of pilfering some $6,500 raised on behalf of the family's 5-month-old son, who needed a heart transplant due to a congenital heart defect. The family friend said he'd donated the money to related charities rather than giving it directly to the family.
In an email message, GoGetFunding spokeswoman Victoria Thomas said the site requires fundraising campaigns to raise at least $100 offline before they can be posted online.
"This helps us assess more fairly," Thomas said. "We do have some campaigns which on the face of it look incredibly suspicious, but are in fact genuine campaigns being managed by users with no fundraising experience and minimal computer knowledge."
None of the safeguards provide watertight protection against scams, said Larry Lieberman, the chief operating officer of Charity Navigator, a Glen Rock-based nonprofit that evaluates other nonprofits nationally.
"GoFundMe lives up to its obligation to verify the identity of the person receiving the money," he said in an email message. "Unfortunately, they are unable to do much to verify the integrity, honesty, or even the ability of the recipient to carry out their duties."
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