Scammers are always seizing opportunities to make a profit. Their activities don't halt during times of disaster - in many cases they increase. These schemers exploit tragedy, capitalizing off of people's generosity and loss and eventually multiplying the horror of the event by swindling donors and victims out of cash.
Various crises have seen the worst of these culprits. September 11, 2001 disaster scams included requests for money to hire computer experts to track down Osama Bin Laden, according to the Associated Press, and to donate to the fraudulent "Firefighters In Need" fund. During the aftermath of the 2004 Sri Lanka tsunami, the Federal Bureau of Investigations received reports of how concerned family members and friends could receive assistance locating loved ones who may have been victims of the disaster for a fee from posted email addresses. The devastation of Hurricane Katrina gave rise to scams that included inflated prices for repairs and charity fraud schemes that misappropriated funds.
Scams have evolved with the advancement of technology. Days after the terrorist attacks on September 11, 2001, millions of Americans reached into their wallets for their debit or credit cards to make donations via the internet. They were misled by fraudulent sites and bulk email solicitations from spammers posing as the Red Cross. (Learn more about a different type of fraud in Debit Card Fraud: Is Your Money At Risk?)
Hurricane Katrina and the earthquake disaster in Haiti saw the realm of new platforms expand for scam artists. Instead of the out-pouring of money over the internet, donors punched a couple of numbers on their mobile phones to make their contributions. The FBI cautioned donors against texting scams. A donor would have to follow up the text with a phone call and give out personal information. Fraudulent solicitations have flowed through exchanges and updates among friends, colleagues and associates on social networking sites. Scammers had posed as quake victims or represented a government or charitable official collecting donations on these sites.
Don't let your well-intentioned contribution get swallowed by fraudsters. Pay attention to their scheming ways and protect your money.
Know the Red Flags
Scam artists may be skilled but they do give away plenty of clues. A savvy donor is wise to their strategies. Keep an eye out for the following seven red flags:
- On the spot donations
Don't let a heart-felt story followed by an urgent demand for cash have you fooled.
- Refusal to provide written verifiable information
They should be able to back up their claims and intentions with evidence.
- Avoiding questions
The organization should not only welcome questions, but also encourage your curiosity about its origin and financial distribution.
- The name of charity
Watch out for those scam artists that select official-sounding names resembling reputable organizations.
- Providing credit card information to solicitors.
Phone solicitors and unsolicited spam emails may commonly request your financial data. If you prefer to make the donation over the phone, make sure the relief organization is well known. Call the organization yourself, especially if you are contacted. Don't respond and avoid clicking on links of an unsolicited email. Some of these emails have been known to contain a virus.
- Newly-formed organization
Determine whether the organization has the infrastructure to distribute relief efforts.
- Requests to write the check to the solicitors
Attorney Generals suggest not giving cash and making the check out to the charity using its full name and not to the fundraiser, and to mail the check directly to the charity.
Investigate the Charitable Organization
Research the charities to know which can provide the most assistance and gauge their swiftness to take action. Attorney Generals want you to verify the address, phone number and other contact information; learn about the charities history, purpose and track record of success. You'll also want to ask plenty of questions, such as:
- What percent of donations will actually be used for the charitable cause?
- Does the money go to a professional fundraiser? If so, how much?
- Who employs the telephone solicitor?
- Is the contribution tax deductible?
- What will happen to the excess contributions?
Check out the security of the website of the charitable organization where you are making your donation by looking for a lock icon or making sure that URL starts with "https." The FBI suggests verifying the legitimacy of a non-profit by checking with internet-based resources. See if other legitimate charitable organizations, watchdogs or government agencies are linked to the site. (See Avoiding Online Investment Scams to read some tips on how to avoid being duped by deceiving websites.)
Check with the following organizations. Some compile a list of reputable charitable organizations.
- Better Business Bureau
- Federal Trade Commission
- Federal Bureau of Investigations
- State Attorney General's Office
- State Bureau of Charitable Organizations
The Bottom Line
It's prime-time for scammers when tragedy strikes. When a disaster occurs, protect your finances and your good intentions, avoid giving out your personal and financial information to questionable solicitors and ask for identification when approached. Find out if the charity is registered or is filing with the Attorney General's Non-Profit Organizations/Public Charities Division.
Text donations don't occur immediately, according to the Better Business Bureau, and may take as long as 30 to 90 days before it gets to the appropriate recipient. Always read the fine print involved with this communication.
Consider sticking with organizations that have successfully handled large portions of money and clearly state where you want your money to go. Most importantly, if you are uncomfortable with an organization don't donate to it - find a more reputable agency.
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