smart spending

How to sniff out a charity scam

Money jar
Highlights
  • Scammers prey on people's emotions and desires to help in a disaster.
  • Following any disaster, a slew of new charities will crop up to aid victims.
  • You should be wary of any unsolicited requests for donations.

In the aftermath of Hurricane Irene or other natural disasters, donating to a charity can bring much-needed relief to suffering victims. Unfortunately, not every charity is on the up and up. Scammers preying on people's emotions and desire to help are plentiful after a disaster, making it hard to determine what is real and what isn't.

"There's always going to be unscrupulous people that try to get in the middle of the flow of money to charities," says Sandra Miniutti, vice president of marketing for Charity Navigator in Glen Rock, N.J. "Making sure it's an actual charity still doesn't mean they are going to do great things, but at least you know it's not an individual walking away with your money."

Before you donate your hard-earned money, follow these tips to confirm the charity you are donating to is indeed legitimate and not a charity scam.

Verify the charity

Following on the heels of any disaster, a slew of new charities will crop up to aid victims. While many are legitimate, many are charity scams. Thankfully there is a way to confirm the legitimacy. Unless it's church-related, all charities based in the U.S. are given tax-exempt status from the Internal Revenue Service.

An easy way to confirm a charity is legitimate is to check out IRS Publication 78, says Bennett Weiner, chief executive of the Better Business Bureau, or BBB, Wise Giving Alliance in Arlington, Va. IRS Publication 78 is an online directory consumers can use to search a charity's status.

Keep in mind that churches don't have to formally apply for tax-exempt status with the IRS, so they may not be listed in the directory, Weiner says. The BBB also has a "For Charities and Donors" Web page, which lists legitimate charities. Using that or another charity verifying website like CharityNavigator.org can help ensure the so-called charity isn't trying to scam you.

Be wary of unsolicited requests for donation

Whether it's a person standing outside a store with a jar or an email asking you to click on a link to donate, experts say you should be wary of any unsolicited requests for donations. "Emails that claim to link to a well-known relief group may end up being a phishing activity designed to steal personal information," says Weiner.

Phishing is a type of online identity theft. It uses email and fraudulent websites designed to steal your personal data such as credit card numbers, passwords or account data, according to Microsoft's Safety & Security Center website. The best thing to do is to go directly to the charity instead of linking to it from an email or text message.

"When Hurricane Katrina happened, the FBI reported roughly 4,000 bogus websites stealing people's information and/or their money, and that may happen again," says Miniutti.

She says social media have raised the stakes for charity scams because it's hard to confirm what's behind a Facebook message or Twitter feed. "It's easy to create a fake website that looks like a legitimate charity," Miniutti says.

Question any charity that claims a 100 percent donation

Sure, we would all love to see 100 percent of our donation go to aid the victims of a natural disaster, but the reality is that charities have operating costs just like any other business. Weiner says consumers should be skeptical of any charity that claims the entire donation is going to the victims. "After every disaster, some charity makes that claim," says Weiner, noting that even credit card donations have some form of processing fees.

Avoid charities that are pushing a hard sell

While it's a charity's mission to solicit people for donations, any charity that puts excessive pressure on you to donate or demands an on-the-spot gift, especially a cash one, should raise alarm bells, Weiner says. It might be a charity scam. Legitimate charities give you the time to go to their website or research what they are trying to do before you make a donation.

Consumers also need to be mindful of telephone solicitations that appeal to your emotions but don't tell you what the charity is actually trying to accomplish. Weiner says, in that case, take down the name of the organization and check its legitimacy before making a donation.

"Give with your head not just your heart," Weiner says.

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