Charitable Donation Scams: Big Business During the Holiday Season.

The holidays are the season for giving, a time when people look for ways they can make a difference for those less fortunate and give back to their communities. In 2020, Americans made $471 billion in charitable contributions. It’s estimated that in a given year, approximately one-third of all donations are made in the month of December alone.

As the non-profit sector ramps up its marketing efforts to attract those end-of-year donations, so do scammers hoping to cash in on the holiday season generosity.

Unfortunately, charitable donation scams can impact more than just the victim. Not only do scammers prey on the generosity of the public to steal hard-earned money, but they also prevent those funds from ever reaching the people who need it the most.

Types of Charitable Donation Scams

Email Campaign Scams

More than half of the population uses email to communicate, and for many, it’s the primary means of communication. In 2020, more than 306 billion consumer and business emails were sent every day worldwide. That number makes it understandable that email is considered the best marketing channel available today. Scammers are using this massive form of communication their benefit.

Avoid opening emails from people and organizations you don’t recognize, especially if the email contains links or attachments asking you to donate money to an individual or a cause. Typically, the goal of these types of emails is to lure you into “donating” your money, but instead infects your device with malware and/or acquires your banking and personal information. If you are uncertain if an email soliciting donations is legitimate, it is best to find the proper contact for that organization and reach out to him or her directly.

Crowdfunding Campaign Scams

Crowdfunding campaigns have become a popular way for individuals to raise funds for unforeseen medical expenses, catastrophic events, and causes they believe in. You’ll often see these campaigns on social media platforms. While there are charitable crowdfunding campaigns out there, unfortunately, not all of them are. These campaigns can offer scammers an opportunity to play on the heartstrings of those wanting to provide assistance to those in need.

With crowdfunding campaigns, the proceeds usually go directly to the campaign organizer. There is no way to confirm how the funds are used once they are sent, so you want to be sure that you are donating to a trustworthy cause.

It’s common practice for people to share or repost these campaigns on their social media feeds to help get the word out and generate donations for the organizer. Tip: if you see a campaign that has been reposted several times, it may not be wise to donate to that particular cause because you are less likely to know the organizer personally. You can’t be sure your money will be used for the cause you intended. Similar to email donation solicitations, it is best to find the appropriate contact for that organization and reach out to him or her directly if you are uncertain that a campaign is legitimate.

If you believe you’ve been the victim of a charitable donation scam via a crowdfunding campaign, report it to the appropriate platform right away. GoFundMe, Kickstarter, and Indiegogo are popular for creating crowdfunding campaigns and they will take any necessary action, once they’ve confirmed that someone has used their platform for fraudulent purposes.

Social Media Scams

Social media provides abundant opportunities for charitable donation scams to take place. The most common way is by scammers using fraudulent accounts. Being able to distinguish a legitimate social media account from a phony one will help you protect yourself.

Legitimate charitable organizations will have verified accounts, which are displayed with a blue checkmark symbol on their profile page. If this verification is not present, look closely at the name on the account. Fake accounts will often use the name of a known entity and add or change one letter, character or symbol in the hopes that you won’t notice.

For example, @theredcross and @theredcrosss look the same at first glance, but there is an additional “s” at the end of the second one. Scammers are hoping that you won’t catch the difference and still click on “donation” links posted by the account.

Legitimate charitable organizations will never send you a direct message. When an account you don’t typically interact with sends you a private message, this is a red flag. Furthermore, if you check their profile page and see very little activity or pictures, it is another probable fraud indicator. Your best bet is to block the account and report them to the platform.

Pay attention to the type of payment being requested. Social media scammers seeking charitable donations are likely to ask you to donate via gift card or wire transfer because they’re very difficult to trace. Requiring these types of payment is an almost sure sign of a scam.

Telephone Scams

With the latest in technology, it takes very little effort for scammers to reach a massive target population by phone and it’s virtually impossible to stop the calls from coming in.

Charitable donation phone scams can be incredibly lucrative when committed by phone. In March of this year, the FTC announced a fraudulent operation they shut down with the help of 46 other agencies spread across 38 states. In this case, a staggering 1.3 billion calls were made to 67 million people to deceptively raise funds for organizations serving homeless veterans, cancer patients, and children with disabilities. In a seven-year period, this one charitable donation scam stole $110 million from unsuspecting victims over the phone.

There are rules that charitable organizations must follow to use the telephone as a means to fundraise. It can be easy to spot a scam because they don’t abide by the regulations, which include:

Robocall technology is prohibited altogether. If you answer a call and it isn’t a live human on the other end, a charitable organization cannot legally ask for donations.
The charitable organization name and phone number must show up on your caller ID.
The caller must identify their name, what organization they are with, and that the purpose of their call is to solicit donations for that organization.
Charitable organizations are only allowed to call between 8 a.m. and 9 p.m.

How to Avoid Charitable Donation Scams

Take Your Time

Once you’ve found a cause that you would like to support, take your time deciding how much you want to contribute. Scammers know that the faster they can get you to pay, the less time you have to realize you’re being scammed. If you are asked to make a charitable donation and there is a sense of urgency, this can be a red flag.

Reading stories of suffering can certainly cause a strong emotional response, making it easy to act on impulse. Deciding where to donate money deserves careful consideration, and you want to ensure that your contributions will get to the people you most want to help.

Do Your Research

Take time to do the proper research before making a charitable donation. The Federal Trade Commission provides a list of resources that allow you to view the track record of a charitable organization you are considering contributing to. If you’re looking to contribute to a local organization, make sure they are registered with your state.

A simple online search can also provide useful information. Conducting a search that includes the name of the organization you are researching, alongside the words “scam,” “complaint,” or “review”, can show you what other people have experienced from their dealings with that organization. Legitimate charities will generally have positive reviews, whereas phony ones will have negative reviews or nothing at all.

Use a Safe Payment Method

Never donate with cash, cryptocurrency, gift cards, or wire transfers. Reputable organizations will never ask you to use these payment methods. Credit cards are the safest way to pay because they offer their customers zero fraud liability on purchases over $50. This protection will cover any money lost to charitable donation scams.

Confirm That Your Donation is Tax-Deductible

Alongside the giving spirit of the holiday season, the fourth quarter is also the time when people are looking to make year-end charitable contributions to use as a tax deduction. A charitable donation will only qualify for a tax deduction if the organization you contribute to has tax-exempt status with the IRS, also known as 501(c)(3).

A nonprofit organization is not required to establish 501(c)(3) status to accept donations, but without it, a donor cannot take advantage of the tax benefits. To make sure that your donation is tax-deductible, run a tax-exempt organization search through the IRS. A fraudulent organization cannot obtain tax exemption status, so if the organization you’re interested in shows up in this search, it provides an extra layer of assurance that you are dealing with a reputable organization.

Donate Through a Third-Party

If you feel uneasy about your ability to vet a charitable organization, you can use a reputable third-party program like Charity Navigator. Charity Navigator is recommended by The Federal Trade Commission as a secure and trustworthy source of information s, and includes reports and ratings about organizations registered on the site. It also allows you to research how a particular charity spends its donations and conducts its business.

Charity Navigator also offers a program called The Giving Basket, which gives you the ability to donate to one or more charities of your choice while ensuring that your personal information remains secure. You can set up a recurring donation payment and track donations through their platform.

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