The Downside of Crowdfunding?

Most of the articles that we read for this week discussed non-traditional funding and supporting of new ventures, and means by which to monitor the value of such ventures.  Some approaches were based on using financial instruments to fund social enterprises, while others discussed the role of the government in this sector. The article that struck me as most significant was focused on Kickstarter and other crowdfunding options, which rely on small donations from a high volume of donors to fund new projects.  

The reason that Kickstarter and crowdfunding is gaining an increased profile is that the JOBS Act will allow basically anyone to fund startups in the 'crowdfunded' manor.  The article featured in "Fastcoexist" hails this as a great accomplishment, and highlights the impressive potential this means for the funding of startups.  Crowdfunding has already topped $5.1 Billion for the year, and is only expected to increase. This will certainly mean that more startups will receive more funding than ever before.

The article that I found on Time.com, "The Crowdfunding Economy is About to Pop," also discusses the impact of the JOBS Act.  Along with granting the same praise as the article found on fastcoexist, the Time article discusses the complications that could arise from the floodgate related to the JOBS Act. Due to the decreased regulation, the article states that small time funders could be scammed, en masse.  This would have dire consequences for the crowdfunding arena.  One possible solution to this potential problem would be increased regulation on the part of the Securities and Exchange Commission (SEC).  This brings me to my central question of this post:  Are the fears of crowdfunding-scams legitimate, and should the SEC step in and impose regulation?  On one hand, an open season on crowdfunding could permit a wide variety of startups, socially focused and otherwise, to launch and make an impact.  On the other hand, if too much fraud occurs, a large segment of the population will be left disenfranchised, unlikely to trust startups, even those worthy of investment.  This is not a cut and dry issue.