How to Donate Wisely & Avoid: Charity Scams

1. What are Charity Scams?
2. Red Flags of Fake Charities and Scams
3. Common Charity Scams
4. How to Beat Charity Scams and Identity Fake Charities
5. How to Recover from a Charity Scam

Giving USA Foundation's annual report on U.S. philanthropy states that Americans gave over $470 billion to charity in 2020. But just because a person claims to be collecting contributions for a charity doesn't mean they are. The best way to ensure that you're not giving to fake charities is by learning about charity scams and how scammers take advantage of people's goodwill.

What are Charity Scams?

In a charity scam, the scammer takes advantage of your giving nature by claiming to be from a legitimate charity or making up a fake charity and asking for donations. This may be after a disaster when the entire nation is wondering how they can help with relief or during the holidays when the country is in a giving mood.

The scammer may call you on the phone and ask you to pay with a gift card or wire transfer. They could take advantage of crowdfunding websites and set up a fake charity there. Or they could send you an invoice directly from PayPal asking for a donation hoping you won't do any research before you click the link and make a payment.

Red Flags of Fake Charities and Scams

While a scammer can be pretty convincing when they are trying to steal your money, you can avoid falling victim to a charity scam if you do your due diligence and look out for red flags like these:

• They ask for payment of a specific or unconventional type like a gift card, cryptocurrency, wire transfer, or cash.
• The scammer pressures you to give money immediately (they do this to prevent you from doing research and discovering that it's a fake charity).
• You get a thank you email from a charity you never contributed to.
• They call before 8 a.m. or after 9 p.m., which genuine charities will never do.
• They are vague about the charity's name or purpose.
• The charity's email or website has spelling, grammatical, or technical errors.
• The donation request came via a robocall or pre-recorded message.

Common Charity Scams

There are probably just as many charity scams as there are charities in the world. It is a popular way for scammers to cheat you out of your money.

PayPal Charity Scams

In a PayPal charity scam, you may get an unsolicited email from a person who claims to be from a charity asking for a donation through PayPal. The scammers will use PayPal to create an invoice for the fake charity and send it using PayPal's system.

Once you click on the PayPal link and make the payment, the scammer will be gone with your money. Unfortunately, in some cases, you may never even realize that the money fell into the wrong hands.

Disaster Charity Scams

In this charity scam, the scammer will take advantage of a current disaster that is in the news and claim they are collecting funds to help the victims. The scammer may even claim to be from the Internal Revenue Service (IRS) or working on their behalf.

They may say they are having trouble locating some victims of the disaster and request money to help them file casualty loss claims or get tax refunds and that your money can help.

Crowdfunding for Fake Charities

Modern internet technology has changed charities. Crowdfunding and social media sites allow them to quickly reach a wider group of people, but it has given scammers the same advantage.

A scammer will set up fake charities on sites like GoFundMe and Kickstarter. Then, they promote the charity through social media and take off with the money of everyone who didn't do their research before they donated.

Holiday Charity Scams

Scammers often take advantage of the holidays when people are in a giving mood to pressure them into giving to fake charities. They may even try to convince you that you donated during the last holiday season. Real charities accept donations all year round, not just during the holiday season.

Police, Firefighter, and Military Charity Scams

The police, firefighters, and military men and women of this country spend their lives protecting people from harm and are respected by a large part of the population. Unfortunately, scammers take advantage of this respect by claiming they are collecting for your local police department, fire station, or military branch.

Some legitimate charities do this, but there are just as many scammers out there hoping you won't check up on them before you donate.

How to Beat Charity Scams and Identity Fake Charities

Luckily, there are a lot of resources you can use to ensure a charity is legitimate. If you are contacted by someone claiming to be collecting contributions for a charity and notice any red flags, use these tips to avoid falling victim to the scam:

• Research the charity at these sites to determine if it is real:
  • Charity Navigator
  • The Better Business Bureau
  • Your state consumer protection office
  • Your state's charity regulator
• Don't click on any links in emails or texts. If the charity is legitimate, they should have an official website or phone number you can call to donate.
• Ask for details about where the money is going.
• Search online for the charity along with the words "complaint," "review," "fraud," or "scam."
• Confirm the charity's name, website, and mailing address to determine if they are trying to impersonate a well-known charity.
• Double-check the charity name with Caller ID. While this can be spoofed, an actual charity will always have a Caller ID that matches their name.
• Don't give any personal details to the caller.
• Pay with a credit card so that you can dispute the charge if it turns out to be a scam.

How to Recover from a Charity Scam

The following steps can help you protect your identity, data, and finances if you have fallen victim to a charity scam.

Document the Scam

Keep all the information you have regarding the scam for authorities. Some details you will want to record include the name of the person you talked to, any phone numbers you called, the email you were sent, or the website you were directed to.

Report Fake Charities

Collect all the details about the charity scam and report it to the authorities, including:

• The Federal Trade Commission (FTC)
• Your state's Consumer Protection Office
• The National Center for Disaster Fraud if the fraud relates to a natural disaster
• Your state's Attorney General's Office
• Your local police department

Contact Your Financial Institution

You should notify your bank, credit card company, money wire service, or gift card company if you have been scammed. Dispute the charges or ask for them to be reversed. Inform them if you entered banking information on a phishing website, and they will try to help you prevent the loss of your money.

Tell People You Know About Fake Charities

Charity scammers usually target as many people as they can—the best way to protect your friends from falling victim to the same scam is to tell them about it.