How to Spot a Charity Scam
Giving to charity can be a wonderful thing. Unfortunately, some people take advantage of the goodwill of others. Luckily, there are many ways you can spot a charity scam. Research any charity before donating to make sure they're legitimate. Watch out for warning signs, such as people who push you to donate or only want cash donations. Protect your personal information. Never give out banking information online and avoid wiring money or donating via money orders.
Make sure a charity uses the right name.Charity scams often use names similar to well known charities. This is because scammers think you're more likely to give to a reputable charity. When a charity asks for donations, type the name into the search engine before agreeing to donate.
- Something is probably fishy if the search engine redirects. It may, for example, suggest the name of a similarly named charity that is more well known. This is a sign the charity is attempting to masquerade as a better-known charity to get money.
Ask the right questions when talking to a representative.Real charities will be upfront regarding any questions you have. This is because a quality charity has nothing to hide and representatives will be happy to reassure consumers they're legitimate. A fraudulent charity, however, will dodge certain questions or fail to provide detailed information. A solid charity should have no trouble answering most of the following questions:
- What is the address of this charity?
- Is there a number I can use to call you back?
- Are donations tax deductible?
- What portions of donations go towards your cause?
- What local organizations do you work with?
- Is the charity registered in this state? 40 states and the District of Columbia require federal and state registration for all charities soliciting in their jurisdiction - it's the law. When/if the scammer says "yes," ask them to give you the charity registration number so you can look them up on the state check-a-charity website. Scammers will move on to an easier prospect.
Look the charity up.Never give to a charity on the spot, especially a charity with an unfamiliar name. Always run a charity's name through a variety of websites to see if anything suspicious comes up.
- Check the charity's reputation on the Better Business Bureau, Charity Watch, Consumer Reports, and BBB Wise Giving Alliance. Such organizations re-post the IRS registered charity list (aka the "EO" or "Exempt Organisation List") so you will know if the name you were given and search is registered with the IRS. These sites strive to evaluate a variety of charities and alert consumers to fraudulent charities; unfortunately, there is no way to know if the caller is being truthful when they tell you where they are calling from. They may have anticipated your question and researched the correct answer to perpetuate their scam.
- You can also type the name of the charity followed by the word "scam" into a search engine. You may find news articles and other information come up revealing the charity as a scam.
Research with more scrutiny during the holiday season.Charity scams are more prevalent during the holiday season. While you should always research charities before donating, be on extra alert during the holidays. You may be more prone to scams during this time.
- Never agree to donate on the street. Scammers will often try to target holiday shoppers by attempting to sign them up for a fraudulent charity.
Watching for Warning Signs
Be wary about charities that withhold information.A charity should never withhold any information, either in person or on their website. If, while researching a charity, you find key information is unavailable, you may be dealing with a fraudulent charity.
- Charities should be upfront about basic contact information, such as addresses and phone numbers. Keep in mind, though, that a good scammer will have anticipated your question and done some research. Keep asking specific questions. The scammer will politely move on to another less prepared potential victim.
- Reputable charities are honest about where the money goes. You should be able to find detailed information on a charity's website regarding how donations are used and what percentages of donations go towards the actual cause. Legitimate charities will also have third party reviews to validate their claims. The best scammers will make an effort to skin a website with positive information, but a little digging will usually unravel a weak storyline and an average scammer will have ended your call way before you were able to search their site online.
- A charity that is not upfront about such information is more likely to be fraudulent.
Avoid charities that pressure you for a donation.Most charities will work hard to make their case for a donation. This is how charities continue to sustain themselves. However, if a representative is very pushy or rude, even after you've declined a donation, you're likely dealing with a fraudulent charity.
- It's normal for a charity representative to politely make the case for a donation. They may calmly repeat the benefits of their charity and ask you to reconsider.
- A scammer, however, will use more aggressive tactics. They may become somewhat hostile and attempt to guilt trip you into donating, asking questions like, "Don't you care about this cause?" A scammer will not politely restate their case. They will aggressively attempt to coerce you into donating after you've declined or requested more information.
Make sure the charity can provide proof contributions are tax deductible.A legitimate charity should be able to easily provide you with paperwork that allows you to claim a tax deduction for a donation. If a charity is unable or unwilling to provide this paperwork, it's likely a scam. Do not work with charities that cannot provide such paperwork.
Stay away from charities that advertise sweepstakes.A reputable charity would not conduct a sweepstakes for donations. Real charities put the bulk of their money towards their cause and organization. If a charity claims you're eligible to win a prize or sum of a money in a sweepstakes as a reward for donating, you're likely dealing with a fraudulent charity.
Avoid cash only donations.Reputable charities track donations carefully and want to make sure there is no risk of the money getting lost or stolen. They will rarely request cash donations and certainly will not demand cash only donations. A charity that requires cash only donations is likely fraudulent, as they're trying to prevent donations from being easily traced. The money is likely not being used for charitable reasons.
Be suspicious if the charity claims 100% of the money goes to a particular cause.Unfortunately, it is impossible for a charity to direct 100% of donations towards its cause. All charities have administrative, operating, and marketing costs to consider. A charity that claims 100% of funds are put towards a cause is likely fraudulent.
- In general, charities have to spend at least 65% of donations on their cause. Stick to donating to charities who claim a percentage of donations in this range goes towards their cause.
Pay attention to the news.There are often news stories circulating about fake or fraudulent charities. Pay attention to any stories on the news regarding new charity frauds. If you are contacted by a charity that sounds similar to a recent fraud charity, be very suspicious. Research this charity extensively before agreeing to give money.
Protecting Your Information
Do not give out banking information before an agreement is made.If a charity is pushing for banking information before you've agreed to donate, this is a sign you're working with a fraudulent charity. A legitimate charity will want to make sure you're comfortable and that your information is secure. If you're being asked for, say, your credit card number before you've even agreed to donate, this is a sign of a charity scam.
- Never give any banking information to a charity before researching it closely to make sure it's legitimate.
Do not wire money or give money orders.Charities want donations to come through secure, legitimate means. Legitimate charities also track donations carefully to make sure they're following legal regulations. A charity that pushes you to wire money or send a money order is likely trying to get money as quickly as possible, even if the means of obtaining money is not 100% secure for you. This is a sign of a charity fraud.
- Go with your gut. If something about the charity sounds off or suspicious, it could very well be a fraud. Oftentimes, representatives will simply feel untrustworthy if they do things like withhold information or seem otherwise nervous.
- Check your local chamber of commerce for a list of their most involved charities in your community. Find a few that deal with issues that resonate with you, and call them to ask how you can help. Who knows you may make a new friend or find a new hobby or career either way you'll be helping the community you live in.
- Try donating your time instead of your money. Volunteering can help protect you from having your money stolen. It can also help you test out a charity to make sure it's legitimate. After volunteering, you may feel more comfortable with donating money.
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