All You Need to Know About Charity Fraud

  • By Alison OLeary
  • Published: May 16, 2022
  • Last Updated: May 24, 2022

Charity Fraud

Americans can be very generous people: we donate more than $470 billion to charities annually. In this way, we are doing what we can to alleviate the suffering of others who are victims of natural disasters, famine, poor opportunities, joblessness, and lack of nutrition.

Yet charity fraud and charity scams often get in the way of our donations reaching those who need the most help. This type of fraud is sneaky because those practicing it are shameless in their thirst for money. We are unlikely to consider that they're lying because stealing money from a charity is unthinkable. Yet it's one of many forms of fraud, from forging someone's signature on a check to pretending to be romantically interested in another person to rip them off. These sorts of fraud can embarrass the victims, making them less likely to report it to authorities.

Our guard may be down when approached by someone pretending to represent a legitimate charitable cause. Yet we should always stop and think before reaching into our pockets or clicking on a link to donate.

What is Charity Fraud?

There are three basic types of charity fraud: 

  1. Those who take money by pretending to be a charity. 
  2. Those who take money from a real charity they're affiliated with instead of directing those funds to the people or causes it was intended for.
  3. Those who represent themselves as a charitable organization but give only a tiny fraction of the money collected to the intended recipients.

Types of Charity Scams

Social media has become a hotbed of charity fraud. Don't trust sad stories and photos of the people involved without checking the source of information. Many GoFundMe charities are created by scammers who use the real victims' photos. Photos can be checked through reverse image searches online if you have time to investigate. Still, it's easier to give to charities local to the area affected by a natural disaster or to verified nonprofit organizations. GoFundMe has set up a verification process and sometimes returns donations made to fraudulent causes.

Text and SMS scams can also involve charities: you may get a text message that says something like "click to donate to wildfire victims" without a lot of other information. You may think that sending $5 is insignificant but agreeing to the donation also provides the scammers access to your phone number for future scams.

How to Protect Yourself Against Charity Scams

Scams of all kinds have several similarities that should raise red flags for those considering making a donation:

  • Urgency is part of their pitch. They want a donation immediately, before you have time to do any research, reconsider, or ask any questions.
  • They avoid giving direct answers to questions. If you ask how much of a donation goes to the charity organization represented, they may not want to provide a specific answer.
  • Payment options are limited to untraceable sources. Those running illegitimate charity collections do not want to be connected to check fraud or credit card fraud. That's why they seek other forms of payment, such as gift cards, PayPal, cryptocurrency, social media payments, or cash.
  • Double-check website addresses. Scammers can make authentic-looking websites with URL addresses that closely mimic the name of the real charity.
  • Remember that anyone can spoof a caller ID. Just because the call appears to be from a legitimate charity doesn't mean it really is. The same goes for websites and email addresses, which can be manipulated to appear authentic.
    Prevent Charity Scams

The Federal Trade Commission suggests stepping away from the phone (or front door) when approached by a charity. Avoid being taken in by the sense of urgency. Then follow some of these steps to make sure the person is representing a real charity and that the funds you donate will actually go to the recipient you have in mind:

  • Check CharityNavigator.com or the Better Business Bureau's Wise Giving Alliance to authenticate the organization. Call the number on their website to ensure the person soliciting the donation is affiliated with the charity.
  • Find out if the charity is registered to raise funds in your state by contacting your state's office of consumer affairs.
  • If they claim that donations are tax-deductible, double-check that information on the IRS website. If they're wrong about being tax-deductible, they may be misrepresenting other information.

How to Report Charity Scams

The Federal Trade Commission tracks fraud and can prosecute federal crimes that cross state lines. However, your best bet may be your local police department for most suspected scams, particularly if you donated money.

Anyone knocking on doors for charity donations should be registered locally or with the state, and police can verify this. Unfortunately, most phone scams are very difficult to trace. The best way to deal with them is to put your number on the Do Not Call list and register scam numbers with your phone carrier. Blocking numbers helps, but it may not be a permanent solution because scammers can effortlessly change their outgoing numbers.

In general, it's best to donate to known organizations rather than react to strangers' urgent requests. Always donate with a traceable source of funds, such as a credit card or check, never cash. Avoid providing more information than necessary. Always protect your social security number, birth date, and bank account information, as scammers may try impersonating you to steal more money.

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