Tragedy has again struck, this time with a devastating earthquake in Haiti. And that means scammers are rolling out phony charities, bogus e-mails and other tricks to exploit people with good intentions.
“Whenever there is a major natural disaster, be it home or abroad, there are two things you can count on. The first is the generosity of Americans to donate time and money to help victims. The second is the appearance of poorly run and, in some cases, fraudulent charities,” notes Art Taylor of the Wise Giving Alliance, where you can research bona fide charities and relief organizations vetted by the Better Business Bureau.
“Not only do Americans need to be concerned about avoiding fraud,” explains Taylor, “they also need to make sure their money goes to competent relief organizations that are equipped and experienced to handle the unique challenges of providing assistance.”
The BBB provides important questions donors should ask before giving.
Other websites where you can check out charities before donating include Charity Navigator, Charity Watch and GuideStar. The Federal Trade Commission is also offering advice on making donations for Haiti relief.
Ask before you donate
In these cash-strapped times, many donors want to help with food and clothing. But such in-kind donations may not necessarily be the quickest way to help disaster victims. Before you start collecting, try to find out whether the organization has the staff and infrastructure to properly distribute such aid, and whether it has transportation and distribution plans in place.
You’ll also want to know whether the charity is providing direct aid or raising money for other groups. Either can be worthy, but you may consider avoiding a middleman by giving to a group with an on-the-ground presence in Haiti.
Be suspicious of any claims that 100 percent of your donation will assist victims. Legitimate charities typically spend up to 25 percent of donations on fundraising and administrative costs.
And don’t donate cash. Checks should be made out to the name of the charity—not the person claiming to represent it.
If you donate via credit card, at least 3 percent will automatically be skimmed by banks and card credit companies to cover their processing and "transaction" fees. This amounts to about $250 million in profits from charitable donations, according to an analysis by the Huffington Post.
In the past, credit card companies have only been willing to waive their fees for charity once—for the tsunami disaster of 2004. The exceptions: Capital One bank, through its “No Hassle Giving Site,” waives transaction costs for holders of its Visa or MasterCard cards so the entire donation goes to a chosen charity. And on Thursday, American Express announced that through the end of February, it would rebate back to charities all processing fees for credit card donations made to any of the charities listed at www.usaid.gov.
What to Avoid
Any in-the-news disaster results in a frenzy of relief appeals—many of them scams. Here’s how to deal with them.
Telephone solicitations: Never give personal or financial information, including a credit card number, to an unsolicited caller. Legitimate charities may solicit by phone but will always send you authenticating paperwork at your asking. Hang up on anyone representing a sound-alike name of a well-known charity—a common ploy by charity fraudsters.
E-mails: Nearly all are bogus. Unless you previously made a donation to a particular group, and provided it with your e-mail address, delete any incoming e-mails seeking a donation. Not only are they usually scams, the e-mail could contain links (often disguised as links to photographs of disaster damage) that could unleash a computer virus, warns the FBI.
Websites: Another danger zone. In the wake of Hurricane Katrina, some 6,000 relief websites quickly popped up; many proved to be scams. If you want to contribute online, type the website address of your designated charity yourself; don’t rely on the links that keyword searches may provide. Suspicious websites, as well as e-mails, should be reported to the FBI’s Internet Crime Complaint Center.
Mailings: These are least likely to be scams, but be suspicious of mail from groups to which you have never previously donated. Although the sender may have purchased a mailing list with your name and address, so can scammers. If a mailing seems genuine, search the websites noted above to make sure it is an authentic charity.
Sid Kirchheimer is the author of Scam-Proof Your Life.