As Healbe's $1.1m Indiegogo scampaign closes, what now for fraudulent crowdfunding?

By James Robinson , written on April 16, 2014

From The News Desk

A few minutes ago -- midnight Pacific time -- the Indiegogo campaign for miracle calorie-counting wristband, "GoBe," officially ended. Absent any last minute fraud prevention action by PayPal or the major credit card issuers,  Moscow-based Healbe is about to receive somewhere in the ballpark of $1,100,000 from users of the crowd-funding platform.

For weeks, Pando has been reporting the seemingly endless red flags around the campaign, and Indiegogo's flat refusal to do anything to protect their users from what every expert we've spoken to agrees is a clear scientific fraud. (If you're new to the story, this is a good place to start.)

As I explained this past weekend, Indiegogo's grotesque negligence over the Healbe campaign -- which actually borders on active conspiracy to defraud -- means there's nothing for us to do now but wait. Either for Healbe to fail to deliver on its promises (as experts tell us they certainly will) or to revolutionize medical science and make us eat our collective hat (as Healbe's PR team insist will happen.)

But as the GoBe campaign closes, this seems like a good time to remember that they weren't the first hardware scam to exploit Indiegogo's apparently useless fraud prevention "algorithms," and nor will they be the last.

Just last week, a carbon copy of a still active Kickstarter campaign for XY, a bluetooth tracking tag, showed up on Indiegogo. An ambitious fraudster had simply ripped off the campaign assets from Kickstarter and reposted it on Indiegogo. The fake sailed right past Indiegogo’s much vaunted proprietary fraud algorithm and, even when the person running the legitimate XY campaign contacted the company, they still did nothing. Nothing. It took days of social media pressure and a Reddit-thread later to have the fraudulent campaign deleted.

On March 31, a campaign went live for a “spy cam” called Peek-I, a reflector lens that allowed people to take photos of things at 90 degree angles from their phones. It ran with images of men covertly taking up skirt and cleavage shots. “Want a picture of your secret crush? You can make that happen and your crush won't even think you are stalking him or her, because you will be looking in a different direction," the blurb ran.

Naturally, people complained. After some pressure, the campaign organizers pulled the offending images, but the creepy camera extension itself -- a lawsuit in waiting -- has sailed right past its funding goal.

Early in March an Indiegogo campaign raised $178,000 for EmoSpark, which allows users to “create and interact with an emotionally concise intelligence.” The product video looks like it was composed in a fit of saccharine inspiration after someone saw the movie Her. The campaign was savaged online for its vague product descriptions, the inability to produce a prototype and suspicions that it had massively overstated what it could do.

It goes on. There’s TellSpec, the mystical handheld food scanner, that fronted to Indiegogo with a video that was later outed to be a simulation? (We covered it here.) $386,392, already behind schedule and unable to make its product as it had claimed.

A watch that can read your emotions launched on Indiegogo before mystically disappearing off the face of the Internet, never heard of again.

A thermal imaging camera for smartphones - totally ready for production, it was said - raised $282,000 in early 2013, despite concerns whether such high tech could be put into a low cost package. Surprise, surprise, come next month it’ll be a year behind schedule in delivering its product.

All these campaigns relied on similar dynamics and benefits unique to Indiegogo's no gatekeeping platform, that the Healbe also profited from. In short: Indiegogo allowed them to continue, arguing that as a "platform" it's not their job to prevent even the most blatant scientific and commercial frauds. The crowd will decide what succeeds and what fails!

Still, following the Healbe debacle,  there's some evidence that Indiegogo's faith in the crowd might actually be well placed -- though perhaps not in the way they intended.

We've already reported on the avalanche of refund demands received by Healbe since our coverage began -- so many, in fact, that the CEO of Indiegogo was forced to issue a statement explaining his company's position. But also we've seen a huge number of Tweets and other social media posts from people vowing to never trust Indiegogo again, either for hosting campaigns or for backing them. Non Profit Quarterly warned its readers to use caution when using Indiegogo, saying Healbe should "serve as a red flag" for crowdfunders using the platform.

And there's at least some evidence that users are heeding that advice. For example, right now Indiegogo is hosting a campaign to build a flying car which hopes to raise 2.5m euro in funding in the next month. The campaign has been live for two weeks and has so far banked... just 140 Euros.

So while Healbe's creators sail into the sunset with sacks full of cash, we can at least hope that the caveat emptor message is getting through when it comes to other scampaigns. Either way, readers can be assured that, as far as Pando's reporting on the subject goes, we're just getting started.

[Illustration by Brad Jonas for Pando]