Is This Charity a Scam? How To Quickly Spot Charity Fraud

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Hari Ravichandran

CEO and Founder of Aura

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    What Kind of Monster Would Create a Fake Charity?

    Hoping to help victims of natural disasters, a goodhearted California resident reached out to a charity called Direct Relief International [*]. But when the donation process included a Google form asking for personal information (including an ID photo), the donor realized something wasn’t right. 

    Luckily, the would-be contributor recognized a charity scam and cut off contact. But not everyone notices the warning signs until it’s too late. 

    The FBI’s most recent report on internet crime revealed that money lost to charity fraud and scams has steadily increased each year from 2018 to 2020 [*]. 

    Officially, victims of online charity scams lost a total of $4.4 million in 2020. And that number doesn’t include offline charity fraud or incidents that went unreported or unnoticed.

    Most people who practice charitable giving are generous and empathetic. When there’s a desperate need for help, they’re compelled to do their part. Unfortunately, these compassionate individuals are ideal targets for scammers. 

    If you’re thinking of giving money to a charity this year, you need to know the warning signs to look out for. 

    What Are Charity Scams? How Do They Work?

    Charity scams involve organizations that pose as charitable initiatives and attempt to trick you into giving up money or personal information that can be used for identity theft.

    The people behind these schemes range from scam artists to opportunistic public figures to everyday people who exploit access to charity funds.

    But no matter how the scheme starts, it always ends up taking advantage of people who are trying to do good. 

    Here are some of the most common types of charity scams that steal contributions meant to help those in need: 

    • Impersonation charities: Criminals set up a copy of a well-known or popular charitable organization. These imitations snag donations that were meant for the real charity. 
    • Dishonest distribution charities: Many charities might be technically legitimate, but purposefully misuse the funds they receive. In other words, a disproportionate amount of contributions go towards inflated expenses and salaries, rather than the charity’s intended recipients.
    • Fake disaster relief funds: When widespread natural disasters strike, numerous charities emerge to start raising funds. Scammers set up fake nonprofits to take advantage of compassionate people who want to do their part in a time of crisis. 
    • Fraudulent GoFundMe accounts and social media fundraisers: Fraudsters post stories and photos on social media and crowdfunding platforms to garner pity and raise money. They may even steal someone else’s photos and true stories and use them for their fake posts.
    Take action: If charity scammers have your personal information, this means that your bank account, email, and identity could be at risk. Try Aura’s #1-rated identity theft protection service free for 14 days and protect yourself from online scammers.

    Example: This New York Scammer Started 76 Fake Charities

    When con artists find the right loopholes or gain enough experience, they can cause widespread damage. 

    In one example, a New York man set up 76 fraudulent charities that were all approved by the Internal Revenue Service (IRS) [*].  

    By creating names that sounded very close to well-known charities like the American Cancer Society, the scammer stole $152,000 in donations simply by promoting his nonprofits through online giving platforms. 

    Perhaps the most unsettling part of this story is that there were obvious warning signs indicating charity fraud. For example, all of the 76 organizations were listed under the same address in Staten Island. But by the time the fraud was officially discovered, many people had already fallen for it. 

    This story is a sobering reminder that even poorly-designed scams sometimes slip through the cracks and go undetected.

    How To Identify Charity Scams

    1. Check the charity’s credentials on charity watchdog sites
    2. Conduct your own online search about the charity
    3. Scrutinize the charity’s name
    4. Ask about nonprofit status (and be sure to verify it)
    5. Beware of nontraditional payment methods
    6. Research the charity’s mission statement and track record
    7. Beware of links on social media or in unsolicited emails
    8. Look out for high-pressure sales tactics
    9. Don’t give away personal information
    10. Keep records of your donations

    When you want to help, do everything you can to ensure that your charitable donation doesn’t fall into the wrong hands. 

    Here are the most important things to look out for when you research where to donate:

    1. Check the charity’s credentials on charity watchdog sites 

    If you spot an organization that you’d like to support, there are a few websites that can help you verify whether it’s a legitimate charity. 

    • CharityNavigator.org is a great resource for people who are looking for reputable giving organizations. The website contains a rating system for each charity, which allows you to make a more informed decision about where your money is going.
    • The Better Business Bureau’s (BBB) Wise Giving Alliance features accredited charities and a searchable database in case you need to verify a charity’s website that you find independently. 
    • CharityWatch.org places special emphasis on financial transparency and unbiased reporting. Search results include a detailed rating system, and provide insight into how specific charities distribute their cash flow. 
    • Guidestar.org is another searchable charity watchdog website that aims to help individuals make informed donation decisions. This online resource emphasizes its efforts to provide the most up-to-date information possible about each nonprofit that they analyze. 

    2. Conduct your own online search about the charity

    While checking charity watchdog websites is a great place to start, you can get even more information by doing a little research of your own.

    • Search the charity’s name, along with the words “complaints,” “reviews,” “ratings,” and “scam.” Conduct these searches individually for more targeted results — for example, “[charity name] scam.”
    • Learning what other people have to say about their experience interacting with the charity or making donations can give you an even bigger picture of the organization as a whole.
    • Beyond checking whether or not a charity is legitimate, some tailored internet browsing can inform you about whether or not a giving organization or nonprofit is a good fit for you. 

    3. Scrutinize the charity’s name

    Sometimes scammers rip off names of charities that are accredited or well-known. They create a dummy organization with a name that is practically indistinguishable — unless you examine it closely. For example, a fake charity might call themselves “U.S. Red Cross” hoping they’ll be mistaken for the American Red Cross.

    • After looking up the charity on a watchdog website, revisit the charity’s website and make sure the web address is exactly the same and isn’t misspelled. 
    • Cross-reference the charity’s contact information from the watchdog website to the website you found. Are the customer service phone number and email address the same?
    • Go to extra lengths to make sure you’re on the charity’s official website and not a knock-off scam website. When possible, obtain the website information straight from a reputable source. 

    💡 Related: How To Quickly Identify a Fake Website

    4. Ask about nonprofit status (and be sure to verify it)

    Charitable organizations must maintain a nonprofit status to be accredited. Verifying a charity organization’s nonprofit status is an important part of your research because tax-deductible donations are a defining characteristic of charities in general.

    • Contact the organization personally and request proof of their nonprofit status. Don’t immediately trust their response before doing more digging, and make sure the number you’re calling is the official point of contact for the charity.
    • If the charity is very small or new, it may not appear on watchdog websites until it’s more established and has reached a threshold of donation amounts. If you want to donate to a small charity, it’s important to take even more precautions before going forward with a donation.
    • Since charities are tax-exempt, they must report their earnings with the IRS by filing a 990. Prospective donors can view these records since they are available to the public for transparency purposes.

    Be careful: A nonprofit status doesn’t guarantee that a charity is legitimate. In many cases, scammers are able to apply for and be granted tax-exempt status. Make sure to look for other signs that you’re dealing with an online scammer

    5.  Beware of nontraditional payment methods

    No matter how eager you are to give, some red flags always point to a scam. For example, if a charity requests donations via suspicious payment methods, consider it a warning sign.

    • Always avoid payments via cryptocurrency, gift cards, wire transfers, and cash. These are either untraceable or very difficult (if not impossible) to dispute, or both. If it’s a scam, you won’t get your money back if you pay via these methods.
    • In certain fundraising situations, especially in-person events, cash payments might seem natural or reasonable. However, cash donations are not recommended unless you know and trust the charity.

    💡 Related: 14 Cash App Scams You Didn't Know About (Until Now)

    6. Research the charity’s mission statement and track record

    Any legitimate charity should have a detailed mission statement and goals. They should also be able to describe their giving strategy and answer any questions about their history and current work. 

    • Visit the charity’s official website and pay special attention to the “about us” and “mission statement” information.
    • Look for figures that demonstrate the success of their work and the impact it has made. 
    • Get on the phone and start asking questions. If you notice any vagueness or hesitation, consider taking your donation elsewhere. 
    • Ask how much of your donation goes towards the cause.
    • You can also use the IRS’ Tax Exempt Organization Search Tool to learn more about an organization’s history and current status.

    7. Beware of links on social media or in unsolicited emails

    Social media can be a great place to spread awareness about causes that need attention. But among all the legitimate nonprofits raising money on the internet, there will always be scammers who try to profit from the legitimate need for donations. 

    • Don’t donate directly from information found on a social media account. It’s easy for a scammer to spoof a charity’s official page and collect some of their traffic (and, inevitably, their proceeds). 
    • Don’t act on unexpected solicitations that claim to be from charitable organizations. Unsolicited emails and texts about fundraising veer too far into scam territory, where you risk sending money to an unintended recipient. 
    • Learn more about phishing emails and text message scams so that you can recognize a suspicious message as soon as you receive it. 

    💡 Related: The Worst Social Media Scams Happening Right Now

    8. Look out for high-pressure sales tactics 

    Most charitable causes have passionate leaders behind them. Their dedication to the cause fuels their fundraising efforts and helps them persuade prospective donors to join the fight. But anything beyond encouragement and information should be regarded as a red flag.

    • Every charity has a compelling call to action. But if anyone puts undue pressure on you to donate funds, you’re better off finding a more professional and trustworthy place for your contribution.
    • Your donation happens on your own time. Any attempt to rush the process or make you feel as if you have to act quickly is unnecessary, unethical, and most likely a sign that something isn’t right.

    9. Don’t give away personal information

    While scammers are often motivated by financial gain, they’re after more than just money. Your personal information is very valuable to criminals for committing identity theft.

    For this reason, asking for sensitive information when it isn’t necessary is a definite cause for concern.

    • Don’t give away any information that you’re not comfortable with during the donation process. Any requests by a charity for more personal information should be regarded as suspicious.
    • Don’t provide your bank account number, date of birth, Social Security number (SSN), or other sensitive data to strangers — even if they appear to be working for a good cause. These can be used to steal your identity.

    💡 Related: What Can Someone Do With Your SSN?

    10.  Keep records of your donations 

    Keeping track of all the charitable donations that you make is an important part of financial health. Record-keeping also helps you verify that all of your financial transactions are legitimate.

    • Ask for a receipt whenever you donate. Make a record of your own that includes the amount paid, the name of the recipient organization, and whether it was a one-time donation or a recurring contribution.
    • Ensure that the amount charged to your bank account matches the amount you elected to pay.
    • If you ever see an additional charge for a contribution that was not meant to be recurrent, contact your financial institution right away. You could be dealing with charity fraud.
    Stay safe: If scammers have your banking information, they could take out loans in your name or empty your account. Sign up for an identity theft protection service to monitor your credit and alert you of potential fraud →

    How To Stay Safe When Donating To Charities

    Before reaching for your credit card, ensure that you’ve asked all the right questions and received satisfactory answers from a charity.

    Here’s a checklist to follow every time you donate:

    • Verify the charity on a watchdog site.
    • Conduct your own research to ensure that you agree with the charity’s mission.
    • Make sure the organization’s name isn’t mimicking a well-known charity.
    • Choose a secure payment method, like a credit card or check.
    • Avoid charities with high-pressure sales tactics.
    • Don’t provide detailed personal information.
    • Keep records of your donations.
    • When in doubt, look elsewhere. 

    The Worst Charity Scams of 2022

    Depending on which issues are at the forefront of people’s minds in any given year, new scams start to surface that are especially likely to garner attention. 

    These are the most common offenders from 2022 so far:

    • Ukraine relief charity scams. Scammers have sent millions of emails claiming to be victims of Russia’s war in Ukraine who are in need of donations.   
    • COVID-19-related fake charities. Fake charities have popped up claiming to support COVID-19 victims and research for new and better vaccines. 
    • Disaster relief charity scams. Whenever natural disasters strike, scammers step in to take advantage of these terrible tragedies. So far this year, there have been 15 weather and climate disasters in the United States that have each caused over $1 billion in damage [*]. 
    • Social media charity scams. Scammers benefit from the anonymity of social media to create fake fundraising campaigns. Always research the people or organizations behind a GoFundMe campaign (or similar) before giving. 
    • Fake charities impersonating cancer research groups. Attorney Generals across the country have filed complaints against fake cancer research charities. 
    • Veteran assistance charity scams. Fraudsters also target those trying to support service members with scam organizations masquerading as veteran charities. In one example, a charity called “Help the Vets” spent 95% of the $20 million donated to the charity on covering expenses and paying the founder’s salary [*].

    Did You Give Money to a Fake Charity? Do This!

    If you discover that your donation went to a scammer instead of an important cause or a community in need, don’t let the crime go unreported. Protect your finances and sensitive data, and help bring justice to the con artists behind fake charities. 

    Here’s what you can do:

    • Create a detailed report of the scam, including documentation of your donation, the name of the fake charity, and any other aspects of the scam that you recall.
    • Report the fraud to the Federal Trade Commission online at ReportFraud.ftc.gov. If you gave the scam charity your personal information, you should also file an official identity theft report at IdentityTheft.gov.
    • If the fraud took place on a social media platform or a fundraising website, report the fraud to them as well.
    • Regularly monitor your accounts for signs of fraud or suspicious activity.
    • Secure your devices and online accounts by changing your passwords and enabling two-factor authentication (2FA) wherever possible.
    • Place a freeze on your credit report so that no new accounts can be opened in your name.
    • Consider signing up for Aura’s identity theft protection services for continual monitoring and protection of your sensitive information. 

    The Bottom Line: Don’t Accidentally Donate to Scammers

    Charitable giving shouldn’t be a risky business. You can reduce the risk of being swindled by choosing a few trusted charities to focus on. Once you’ve verified that they’re fully legitimate and ethical, it’s safest to stick with what you know. 

    If an organization you chose to support isn’t what you thought it would be, an online protection provider like Aura can notify you immediately if your financial information is compromised or if you become at risk for identity theft. 

    Don’t leave your personal security up to chance! Try Aura free for 14 days →

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    1. Financial identity theft and fraud
    2. Medical identity theft
    3. Child identity theft
    4. Elder fraud and estate identity theft
    5. “Friendly” or familial identity theft
    6. Employment identity theft
    7. Criminal identity theft
    8. Tax identity theft
    9. Unemployment and government benefits identity theft
    10. Synthetic identity theft
    11. Identity cloning
    12. Account takeovers (social media, email, etc.)
    13. Social Security number identity theft
    14. Biometric ID theft
    15. Crypto account takeovers