The rise of the sharing economy and websites like Kickstarter, Indiegogo, and GoFundMe have led to the expansion of crowdfunding portals across the internet. Oftentimes, these businesses are centered around a niche area or serve to advance a social cause. Even if these businesses are serving altruistic goals, many times the entities are for-profit businesses. In their business models they typically take a small percentage of the funds raised for certain projects as profit.
Tell supporters when their credit cards will be charged
Crowdfunding portals offer a wide range of services. Some websites allow for any dollar submitted to a project to be ultimately transferred to the project owner, typically upon expiration of the fundraising period. On the other hand, some websites require that a funding goal be fully met before any money is released to the project owner.
Limit your liability regarding actual completion of the project.
Your website and crowdfunding portal serves a very specific goal: raising money for specific projects or causes. Your website or portal is not designed to see these projects through to actual completion, and issues can arise when people donate money expecting for a project to be completed that is ultimately abandoned.
Your users need to understand that when they’re giving money to projects, they are taking a risk. If the project is not completed in the manner which was intended, that you the portal will not be held liable for that. It’s a matter of trust and explaining the risks that are associated with these projects to allow your users to make informed decisions about supporting these causes.
Include a Copyright Policy
Let’s imagine this scenario. A project is posted to your crowdfunding portal to raise money to launch a new donut shop. In association with the project, the donut shop posts a video showing the owners making donuts, people eating these donuts, and explaining more about their business. In the background of this video there’s a catchy song. The project’s posted, money is being raised, and all of a sudden you receive an email from a band. That band says, “Hey, the song in that donut shop’s video is our copyrighted work. We did not give the donut shop owners permission to use that song. Because you are also using it, we plan to sue you for copyright infringement.” How do you respond?
If you have a proper copyright policy in place, you can be confident that you would avoid any and all liability in this situation. The Digital Millennium Copyright Act, or DMCA, is a federal law that addresses this situation. The law provides copyright owners with a notice and takedown procedure to allow for the speedy removal of infringing content online.
Now the designated DMCA agent is an extremely important part of protecting yourself from copyright infringement liability. The DMCA provides immunity to service providers, including crowdfunding portals, for copyright infringement, provided a few simple steps are followed. The first step to receiving this immunity is to formally file with the federal government a notice of a DMCA agent. The filing fee for this document’s $105, and the registration form can be found here.
Read about privacy policies for crowdfunding portals here.