Independent candidate for Cowper, Rob Oakeshott, says his identity was stolen with somebody setting up a fake Instagram account with his name and picture.
The user purporting to be Mr Oakeshott attempted to solicit political donations of up to $25,000.
Mr Oakeshott has referred the matter to NSW Police.
"We found out earlier in the week and notified Instagram but were surprised that they didn't seem to have a problem with it.
"We were informed by a constituent who was receiving these weird messages from I guess fake me and they sent me a direct email and we clarified it wasn't me.
"This person kept communicating with the account and ended up being solicited for money and a BSB account was attached and that is when we referred it to police."
Mr Oakeshott said he wasn't sure who was behind the account.
"I am definitely not making any allegations ... there is a good chance this is the reality of social media in Australia in 2019.
I don't think it is the Russians, I don't think it is Trump, I don't think it is Chinese influence and I don't think it is the National Party.Rob Oakeshott
Mr Oakeshott said the reason he has raised the matter publicly was not to attack political opponents but to inform the public.
He said the public should be aware there are "some really astute political operators including online operators".
"I encourage people to have their eyes wide open, do their research and to really trust their judgement about what feels true ... in my view the vast majority of what is out there is basically untrue."