Disentangling crowdfunding from fraudfunding

Research output: Contribution to journalResearch articleContributedpeer-review


  • Douglas Cumming - , Florida Atlantic University, University of Birmingham (Author)
  • Lars Hornuf - , Chair of Business Administration, esp Finance, University of Bremen, Munich Society for the Promotion of Economic Research - CESifo GmbH (Author)
  • Moein Karami - , Concordia University (Author)
  • Denis Schweizer - , Concordia University (Author)


Fraud in the reward-based crowdfunding market has been of concern to regulators, but it is arguably of greater importance to the nascent industry itself. Despite its significance for entrepreneurial finance, our knowledge of the occurrence, determinants, and consequences of fraud in this market, as well as the implications for the business ethics literature, remain limited. In this study, we conduct an exhaustive search of all media reports on Kickstarter campaign fraud allegations from 2010 through 2015. We then follow up until 2018 to assess the ultimate outcome of each allegedly fraudulent campaign. First, we construct a sample of 193 fraud cases, and categorize them into detected vs. suspected fraud, based on a set of well-defined criteria. Next, using multiple matched samples of non-fraudulent campaigns, we determine which features are associated with a higher probability of fraudulent behavior. Second, we document the short-term negative consequences of possible breaches of trust in the market, using a sample of more than 270,000 crowdfunding campaigns from 2010 through 2018 on Kickstarter. Our results show that crowdfunding projects launched around the public announcement of a late and significant misconduct detection (resulting in suspension) tend to have a lower probability of success, raise less funds, and attract fewer backers.


Original languageEnglish
Pages (from-to)1103–1128
Number of pages26
JournalJournal of Business Ethics
Issue number4
Publication statusPublished - Feb 2023

External IDs

ORCID /0000-0002-0576-7759/work/101774285
Scopus 85117367021
PubMed 36779203
Mendeley 6d749414-ce92-377c-8534-8b536ea8b11b