FRAUD

5 Ways to Avoid Charity Scams

According to the Federal Trade Commission (FTC), Americans lost almost $8.8 billion to scams and fraudsters in 2022. Scammers prey on a variety of people including the young, old, and wealthy. Another group they target are generous people, specifically those willing to go out of their way to help others in times of financial need.

Understanding Charity Scams

Charity scams are when a scammer pretends to be a charity requesting money during a time of need or crisis. Examples of this would be following a natural disaster such as a hurricane, or during the holidays when people are more inclined to give. On these occasions, a scammer will reach out pretending to be a charity, then will ask for money in a variety of different ways. They typically make contact over the phone, by text, or through email. Scammers will use spoofing tactics to pose as a reputable charity in an attempt to get your money and information. Not only will you be scammed out of your funds, but the tax benefits from your “donation” won’t be deductible from your tax return.

How to Avoid Being Scammed

1. Verify, verify, verify. The best defense to protect yourself from a scammer is staying informed and asking questions. Checking if a charity is legitimate is relatively easy. Using the IRS’s Tax-Exempt Organization Search Tool, input the information of the charity requesting donations. Results will show if they are registered with a tax-exempt status and if they legally filed with the IRS. If you are unsure about the legitimacy of a charity soliciting your donation, go to their website to confirm ways to submit funds. All charities will have instructions or ways to donate on their websites. Conduct your own research to confirm the legitimacy of charities without clicking any links or attachments sent to you through email or text.

2. Don’t be pressured. Scammers try to take advantage of people by making the situation urgent. Traditionally, legitimate charities will accept payment at any time.

3. Stay skeptical. If the “charity” you are talking to starts to ask for your Social Security number, bank account and routing numbers, or PIN numbers, you should start to question the validity of the charity. This is a sure sign this is a scam. Not only are they trying to get your money but they are also attempting to steal your identity!

4. Don’t wire or send gift cards. When scammers attempt to get money from you, they might request that the funds be moved instantly via wire or untraceable gift cards. They may also ask you to use third-party apps to send money, also making the process difficult or impossible to trace or rectify. You should never work with a “charity” asking for funds in these ways.

5. Trust your gut and don’t click. One of the biggest things you can do is trust your gut. If it feels like a fake charity, then it probably is — especially if you’re questioning its validity. If you feel pressured, if they are asking for personal or financial information, or if they are asking you to send money in an atypical manner, trust your gut and don’t get scammed. Never click on hyperlinks sent over to you via email or text without first verifying the information of the charity either through the IRS’s search tool or through a basic web search.

Always question the validity of the charity asking for a donation. Use these tips while interacting with charities to prevent fraudulent activity happening to you.

Sources:

https://www.irs.gov/newsroom/dirty-dozen-irs-warns-of-scammers-using-fake-charities-to-exploit-taxpayers

https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2022

https://www.irs.gov/charities-non-profits/search-for-tax-exempt-organizations