A recent scholarly study noted that Regulation Crowd Funding is not sufficiently protective of the typical investor.
The study notes that, notwithstanding the disclosure requirements, unsophisticated investors could easily be sucked into a “get rich quick” Ponzi scheme or outright scam.
The required “all or none” rule can be circumvented by using (illegally) several portals with lower minimum thresholds.
And there is no standard due diligence process among the various licensed web portals to weed out the fraudsters.
If enough crowdfunding schemes turn out to be fake, then investors will believe that they all are and lessen access to capital by real companies.