Crowdfunding platforms to be clearer about their costs following ACM action

Going forward, seven crowdfunding platforms will be clearer about the costs that they charge. This has been the result of an action taken by the Netherlands Authority for Consumers and Markets (ACM). Over the past few months, ACM has received many reports from consumers about crowdfunding platforms. These are platforms where you can start a fundraiser to collect donations for personal, social, or charity goals. Crowdfunding platforms must clearly state what amount (including VAT) they deduct from the donations. Consumers reported that they believed that the platform would not charge any costs for fundraisers. Only later did consumers find out that the platform withholds a percentage of the donations. ACM subsequently confronted seven large crowdfunding platforms with these reports. These platforms have already clarified their information. These are Doneeractie, Doneerveilig, Geef.nl, Getfunded, GoFundMe, Steunactie, and Whydonate.

Edwin van Houten, Director of ACM’s Consumer Department, adds: “If you start a fundraiser, for example for the treatment of a family member who is very sick, you want to raise as much money as possible. If it then turns out that the platform has withheld part of the donations without informing you, you will be disappointed. That is why it is important that consumers receive clear information about this in advance, so that they know that this service is not for free and that the platform withholds part of the proceeds. In that way, they are able to compare providers with each other and choose the best offer.”

Fundraisers through platforms are not for free

Crowdfunding platforms must comply with the rules that apply to providers of online services. For example, they have to provide clear information about the price before the fundraiser is launched. This information must be presented in a noticeable location on the website, and it must be clear and easy-to-understand. This means that users do not need to look high and low for this information. It is not sufficient to place information under an “i”-symbol, to have the information displayed when hovering over an icon, or to use a link you have to click on. Individuals that launch fundraisers must be informed about the transaction costs that the platform charges when transferring the donations. On the basis of this information, individuals can decide whether or not to launch the fundraiser and, if so, on what platform. With these rules, ACM wishes to prevent disappointment among users if it turns out afterwards that part of the proceeds are withheld by the platform.

Swift approach to consumer problems

ACM has many different instruments at its disposal for solving consumer problems. When selecting the right approach, ACM puts consumers first. In this case, ACM chooses to confront the businesses in order to solve the problem. By monitoring reports filed with ACM’s consumer information portal ACM ConsuWijzer, ACM will keep a close watch on the crowdfunding platforms, and see whether they implement the adjustments that have been agreed upon.