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Beware of Scam PACs, Blockchain as a Solution

July 30, 2019
James Hall


Beware of Scam PACs, Blockchain as a Solution

ProPublica and Politico co-published a scathing report revealing a fraudulent Conservative Majority Fund raised nearly $10 million since mid-2012 but has only made just $48,400 in political contributions to candidates and committees.

Scam PACs are one unfortunate reality of politics and not partial to one party. Operating behind a mirage of legitimacy, victims essentially send their money directly in the pockets of the PACs committee. All the while, these reports note, the Federal Election Commission (FEC) acknowledges “great leeway on how they use the funds.”

A formal letter sent by the FEC to Congress in 2018 called for a legislative solution to these deceptive PACs. The letter states, “These committees solicit contributions with promises of supporting candidates, but then disclose minimal or no candidate support activities while engaging in significant and continuous fundraising, which predominantly funds personal compensation for the committees’ organizers.”

Unfortunately, it takes deep reporting to uncover this type of fraud. With blockchain technology, however, the public ledger of transactions creates full transparency for all funds and transactions. This is why the use-case for political or charitable donations is so appealing – auditors have the ability to live track donations and transactions made thereafter. 

This level of transparency and accountability helps to sift out the fraudsters and creates competition among nonprofits to spend their money more efficiently. It can also lead to more funds being raised as donors can be confident that their money is being put to good use. Lastly, there could be more funds freed up as blockchain technology will eliminate administrative overhead costs.