Is crowdfunding safe, and what are the rules?

Which risks do you take as a backer?

Three separate ones, and only the first is one a platform can remove.

The first is custody: could the money disappear between you sending it and the project starting? That's handled by design, not by trust, through an escrow a program controls.

Your pledge sits in an escrow account the program controls, not in a CoFunders account. Under the program's rules, only the creator can claim a campaign's funds once it reaches its goal, and only you can take your pledge back if it misses. The program can still be upgraded, and today one key we hold can upgrade it (see /security).

The rules that release a campaign's escrow are public and the same for every campaign. The upgrade key is the limit on how safe this is.

The second risk is delivery, and it's entirely real. A creator can reach their goal, get the money in good faith and then fail. Suppliers fall through, costs double, people get ill. No escrow protects against that, on any platform, and a site that implies otherwise is selling you a feeling. If the creator never delivers sets out what you can still do.

The third risk is your own account: an account with money in it is a target. Transfers are final, so a mistake or a scam has no undo. Nobody at CoFunders will ever ask for your login code or account key. Any message that does is an attack, whatever it looks like. Our guide to keeping your account safe covers the habits that prevent both.

How can you spot a crowdfunding scam?

Look for a named person you can find elsewhere, a plan specific enough to be wrong, and a promised return. Almost every crowdfunding scam lacks the first two and has the third.

A promised return is the loudest signal, and reason enough on its own to walk away. Reward crowdfunding pays no financial return, so a campaign offering one is either misdescribing itself or isn't reward crowdfunding at all. No reward campaign can honestly offer to double your money, guaranteed profit or passive income.

Then look at the person. A real creator has a history somewhere: a company, a portfolio, a university, previous work, a name a search can find. A creator who exists only inside their campaign is asking for money from behind a curtain. We don't verify anyone's identity, so the name on a campaign is just what the creator typed, and the checking is yours to do.

Then look at the detail. Genuine plans have numbers that could turn out wrong: what the money buys, in what order, by when, and what happens if a supplier is late. Scams stay vague because detail gets checked, so they lean on adjectives and renders.

Weigh the reward against the goal, too. A campaign asking for a lot while offering a reward nobody would buy on its own usually has one real plan: the money. On a good one, the reward is worth about what it costs, and the goal is about what making it costs.

Two habits beat any checklist. Never move a conversation off the platform: pressure to pay by direct transfer to a wallet is exactly where you lose the escrow, and the payment becomes final and unrecorded. And never hand over your login code or account key, for any reason, even to someone claiming to be us.

Is crowdfunding regulated in Portugal?

Yes. One law sets the framework for all four kinds of crowdfunding in Portugal, and a later one added the penalties. The authority depends on the kind: donation and reward platforms give prior notice to the Direção-Geral das Atividades Económicas (DGAE), while equity and lending fall to the CMVM.

The crowdfunding law, from 2015, defines crowdfunding as raising funds for entities, activities or projects through an online platform, and names four kinds: donation, reward, equity and lending. They're treated differently on purpose, because a backer takes a different risk in each.

In reward crowdfunding, the kind we run, the funded party must provide the product or service that was funded. That duty defines the category, and it runs from the creator to the backer.

A donation or reward platform gives prior notice before it starts, and here sources contradict each other. The law itself names the Direção-Geral do Consumidor, but a government order replaced that procedure in 2018. The notice now goes to the Direção-Geral das Atividades Económicas through a form on the ePortugal portal. The DGAE's own registration page says it must be given 30 days before the activity begins. A page still naming the consumer directorate is quoting the law without the 2018 order on top.

The penalties came in 2018, in a law that also amended the crowdfunding law. Supervision doesn't follow the filing. For donation and reward crowdfunding, ASAE inspects, brings proceedings and applies fines. Equity and lending crowdfunding sit with the CMVM, the securities regulator, for both registration and supervision.

What it means for you: consumer and unfair commercial practices law applies to how a platform describes what it offers, so misleading claims about returns or safety are actionable. The protection attached to regulated investments doesn't apply, because a reward pledge isn't one. If you want that kind of protection, look at equity crowdfunding, under the CMVM.

Does the EU crowdfunding regulation cover reward crowdfunding?

No. The EU crowdfunding regulation defines a crowdfunding service as matching investors with project owners through loans or transferable securities. A pledge for a reward sits outside it, so the Portuguese law above is the one that applies.

The regulation matters for what we don't do. A platform offering equity or lending crowdfunding to the public needs an authorization under it as a crowdfunding service provider, and we don't hold one. That's one reason investment campaigns are switched off, as the post on what's switched off explains.

For you, the protections written for investors apply to investments, and a reward pledge is a commitment to buy something that doesn't exist yet. Whether backing counts as investing or donating goes into more detail, and every answer we've written is in one place.